Understanding the Law on Unfair Terms and Conditions

The Competitions and Markets Authority (CMA) has launched a campaign to help customers know the rules on unfair terms and conditions and to help businesses keep within the law when it comes to unfair terms. But, according to a poll carried out by the CMA, 54 percent of business owners to not understand the rules themselves.

What Constitutes Unfair Terms and Conditions?

So what exactly do business owners need to be aware of when it comes to terms and conditions? Well, these are usually the terms that give businesses an unfair advantage over the consumer.

These can include, but aren’t limited to, the following:

• Enforcing an excessively long notice period that keeps customers tied into a contract for longer than they want.
• Keeping all of a customer’s deposit if they cancel, regardless of the actual cost of the cancellation to the company.
• Excluding the business’ liability for actions that are its fault, such as delays or faulty goods.

Companies should also be aware that even if they use the terms and conditions from larger companies as a basis for their own, they are not necessarily legal and binding.

Terms that cannot be Enforced

The CMA’s research has also suggested that many companies believe that a signed terms and conditions contract means that their terms can be enforced, when, in actual fact, this simply isn’t true. Terms such as the above can’t be enforced if they are deemed unfair, despite them forming part of the contract.

Keeping on the Right Side of the Law

Companies which do try to impose unfair terms and conditions could find themselves on the receiving end of action taken by Trading Standards. The CMA stated that they are aware that most businesses wish to do right by their customers, but are simply unaware that their terms and conditions could be unfair.

For those companies that would like more guidance, the CMA has produced several videos and an at-a-glance guide to outlining fair terms and conditions, as well as producing a more detailed guide for those that wish to learn more. You can also discuss such matters with your local bookkeepers if you want some tailored advice.

New Small Business Taskforce to Speak up for SMEs

A new taskforce has been set up to act as the lobbying voice for small to medium sized businesses in the UK. By bringing together some of the key SME membership organisations into one lobbying group, it is thought that the Small Business Taskforce, which is the brainchild of Emma Jones of Enterprise Nation, will become the voice of small businesses.

Uniting Membership Organisations

Key SME bodies have been attracted to the new taskforce. These include the Forum of Private Business (FPB), the National Enterprise Network (NEN), the accountancy body ICAEW, the association for freelancers IPSE, and the Centre for Entrepreneurs (CFE).

By joining forces, these membership organisations reach nearly two million small businesses within the UK, which makes up almost half of the total SME population.

The Federation of Small Businesses (FSB) and the British Chamber of Commerce (BCC) are not yet official members, but they will work alongside the taskforce on an issue-by-issue basis.

Making the Voice of Small Businesses Heard

The aim of the new taskforce is to champion the needs of small businesses by lobbying the government in an attempt to reach out to ministers. This will mean that the government can consult small and medium sized firms before introducing new regulations, such as the likes of quarterly tax reporting, which is something that has been concerning SMEs of late.

Five Key Points from the Small Business Taskforce

An open letter to all ministers, including the Prime Minister Theresa May, has been written by the Small Business Taskforce. They have called for five key recommendations for the Government, which are:

• A workable tax regime which is created in consultation with SMEs
• Accessible business support
• International trade for all
• Support for a flexible workforce, which includes ensuring that EU works resident in the UK have long-term residential rights
• Continued consultation with small to medium sized businesses

By working together with small businesses, the idea of the taskforce is that it will promote a prospering economy for our country whilst still listening to the needs of SMEs.

Banks Must Now Offer an Alternative to Businesses Turned Down for Finance

From 1^st November, it became a legal obligation for the UK’s nine major banks to refer any small to medium businesses who they have refused for finance to an alternative provider.

The Bank Referral Scheme

As part of the Small Business Enterprise and Employment Act 2015, the new bank referral scheme is aimed at making life for smaller sized businesses more straightforward through numerous changes, one of which being the bank referral scheme.

The scheme will mean that it is compulsory for banks to refer any small to medium business that they turn down for lending to an alternative finance platform. Three of these platforms have been pre-approved for referrals. They are: Funding Xchange, Business Finance Compared and Funding Options. Their job will be to put potential business borrowers in touch with alternative finance options.

By doing this, it’s hoped that by providing an easy access route and transparency it will aid growth in the UK, and has been hailed as ‘vital step’ in boosting the supply of business finance to small to medium businesses.

Half of First Time SME Borrowers Rejected for Finance

Before the scheme was put in place, the Department for Business, Innovation and Skills, which was replaced in July 2016 by the Department for Business, Energy and Industrial Strategy, reported that 50 percent of SMEs had been rejected for finance. In turn, this led to 37 percent cancelling their additional spending plans.

Indeed, The British Business Bank estimates that 100,000 small businesses are rejected for finance by banks each year; this is the equivalent to a £4 billion shortfall in business funding.

It is thought that only 3 percent of small to medium businesses that are rejected for funding go on to seek alternative finance sources, and it is therefore hoped that by offering the Bank Referral Scheme, a range of finance options will open up to the UK’s smaller businesses. After all, comparison sites are available for the likes of insurance, flights and credit cards, so why not business finance too? If you are seeking advice on funding for your small business, why not talk to your bookkeepers?