The UK Government is consulting on the scope of a new complaints scheme to be operated by the Small Business Commissioner. In particular, the scheme will allow small businesses to complain about payment issues they are having with large businesses.

The office of Small Business Commissioner was set up by the Enterprise Act 2016. The Commissioner’s remit is to support small businesses generally, but the Government wants the Commissioner to begin offering a complaints handling scheme whereby small suppliers that are experiencing payment problems with their large business customers can refer the payment dispute to the Commissioner for a determination. The Government plans to set out the detail of the Commissioner’s complaints handling function in new legislation (Regulations) and is currently consulting on what scope of this function should be, before introducing the regulations in Parliament.

The Government proposes that the Commissioner’s complaints scheme should not only hear complaints about non-payment of invoices but also deal with wider payment issues, including where the large business customer seeks to alter the agreed prices or seeks to enforce aspects of the contract concerning payment it has not previously relied on. The Commissioner’s determinations will be based on what is fair and reasonable in the circumstances of each case. The determinations will not be legally binding (so parties will not be obliged to comply with them), but the Government hopes that they will help contracting parties to resolve payment related issues quickly and amicably. The scheme will not affect the ability of either party to launch legal proceedings. 

The consultation closes on 7 December 2016, following which the Government will publish details of the responses received to the consultation and announce the parameters within which the Commissioner’s complaints scheme will operate. Regulations will then be drafted and introduced in Parliament.

Significantly, the Commissioner is empowered to identify the large business which is the subject of a complaint in a determination. This is an important issue for large businesses because of the potential adverse PR implications. One of the matters being considered in the consultation is whether the Regulations should specify the factors to be taken into account by the Commissioner in deciding whether the large business should indeed be named.

This latest development is part of a series of initiatives by the UK Government to tackle payment problems experienced by small businesses. It is not yet known when the Regulations will be published. However, large businesses need to be aware that these Regulations are on the horizon and of the possible impact on their reputation should they find themselves subject to a complaint and named in a Commissioner determination. Once finalised, they also should familiarize themselves with the detail of the Commissioner’s complaints handling function so they are ready to respond to a complaint made by a small business supplier should that occur.