BEIS has published a consultation setting out its proposals on how the Small Business Commissioner should handle complaints by small businesses about payment issues with larger businesses.
The Enterprise Act 2016 established the role of the Small Business Commissioner to support small businesses, in particular, in relation to disputes with larger businesses. As part of this role, the Commissioner, once appointed, is to provide a complaints handling function. This will allow a small business supplier to seek a decision from the Commissioner about a payment issue with a larger business with which the small business has a previous, current or potential supply relationship.
The proposals pick up the notes of a wider theme around holding larger businesses accountable for their commercial treatment of smaller ones, a theme that predates the introduction of the regulations on late payment of commercial debts in the 90s.
It can be seen alongside the duty, expected to take effect in April 2017, for large companies to report on their payment policies and practices and the 2015 BIS consultation on proposals to expand the powers of trade bodies to challenge grossly unfair payment terms and practices.
It is hoped that, by encouraging a culture change in how businesses deal with each other, the Commissioner will help reduce the frequency of disputes between small business and larger businesses.
The consultation sets out BEIS’s proposals on how the Commissioner should operate the complaints scheme, and seeks views on certain aspects of the scheme. For instance, how a small business’s headcount should be calculated for the purposes of determining its eligibility to use the scheme. BEIS also asks what factors the Commissioner should take into account when considering whether to identify the larger business, if publishing a report on the dispute.
Larger businesses need to be aware that the government proposes to give their smaller business suppliers additional means of holding them to account over payment issues. The Commissioner’s determinations will not be legally binding but may have reputational impact, should the Commissioner publish a report about the complaint, and name the business involved. Larger businesses should familiarise themselves with BEIS’s complaints scheme proposals, so that they are prepared to respond to complaints submitted by such business suppliers.
Smaller businesses need to consider the detail of the scheme and whether BEIS’s proposals will give them a valuable tool with which to approach disputes with their larger customers in the future.
The consultation is open until 7 December 2016. There is no public timetable for formally introducing the scheme.