Money up front

[Northern Highflyer]

I know that any FTO that asks for large sums of cash up front should be given a wide birth but what is considered reasonable ?

One FTO I am looking at states that no up front payments are required or asked for, but my account would have to be a minimum of £1000 in credit at all times throughout the training.

Is this normal ?

While they aren't asking for thousands, is a £1000 credit normal and/or a reasonable request ?

[Julian]

I would not say that £1000 ($1600???) at all times is normal!!

I use an FTO in the US which requires you to put blocks of $750 on at a time, but you run these down to $0 before you put in your next $750. If your account reaches $0 then you dont fly until you top it up again, but whilst you are in credit you fly - Simple!

They give you a gentle nudge if you are getting close to owing them money so there is no danger there! :o)

[Alex Whittingham]

It depends what you are doing. Unfortunately there have been cases where students have had a bad day's flying, and have left without paying their bills never to be seen again.

Because most FTOs have been burnt in the past they often ask you to keep an amount in credit at the start of each day that roughly covers what you would fly off in a day. If you are doing IR training you can easily get through a grand in a day so to expect you to have that in your account in the morning is not unreasonable. If you are hour building at £50 an hour it is unreasonable.

Whatever you do, always pay by credit card, that gives you the most effective protection.

[cfb]

Please also remember that the FTO has to pay a fee on each credit card transaction. It is not unusual for this fee to be scaled in accordance with the size of the individual transaction - the larger the value of each transaction, the lower the percentage fee. As the student is paying off the card spend only once a month (hopefully) then there is little point in lots of individual and low value transactions every few days.
A good FTO will operate a little like your solicitor. The student pays a reasonable amount up front (at least a weeks training) which goes into a "client account" to be held in trust. It can only be "taken" by the FTO as the training actually progresses.
Check if your intended FTO can provide this type of surety.

[Alex Whittingham]

mmm... not sure about that, cfb. I deal with NatWest and their transaction fees are based on a percentage so it doesn't matter whether there are lots of small payments or one big payment, the percentage the FTO pays is the same. The only exceptions to that are Switch transactions, where the fee is a flat fee per transaction, and American Express who take an arm and a leg (which is why we don't take AMEX any more).

I do like the comparison between FTOs and solicitors, who would you trust more? 'Held in trust' has a very specific meaning and this is hardly it. What you are suggesting is that the FTO rogers the clients credit card for a large sum, then holds on to the money while the client flies it off. I can see it benefits the FTO cash flow, I'm struggling to see a benefit to the client.

[Northern Highflyer]

Thanks for the replies so far.

From what's been said it sounds like the best protection is to ensure I have a client account set up which offers at least some protection.