Protection for micro businesses in non-regulated sectors

Overview

The Government is consulting on issues faced by micro businesses (including sole traders) when purchasing goods and services from other businesses in non-regulated sectors, in:

(i) negotiating contracts; and

(ii) being aware of their current protections – and how to use them – if there are issues with goods and services purchased. 

This consultation seeks to explore whether micro businesses have sufficient support and protection in these areas, under existing and pending measures, or whether further protections would be beneficial.

This consultation follows on from the “Protection of Small Businesses when Purchasing Goods and Services call for Evidence” published by the previous Government in March 2015; and the subsequent announcements made by HM Treasury in "A Better Deal: boosting competition to bring down bills fo families and firms", published 30 November 2015.
 

Why your views matter

This consultation follows concerns raised through the Call for Evidence. A number of respondents to that exercise raised concerns about perceived inequalities in bargaining positions between micro business purchasers and larger suppliers. In particular, there were concerns about micro businesses’ ability to negotiate effectively and to access and understand their legal rights. Therefore these areas are the central focus of this consultation, and we suggest potential options that could address them.
 

Given that the responses to the Call for Evidence highlighted that micro businesses are particularly vulnerable, this consultation focusses specifically on that group..
 

Three options are set out in this survey, and these are listed below. The Government is not putting forward a preferred option at this stage.

a. The use of the Small Business Commissioner to provide information on current rights for micro businesses;

b. The introduction of guidance (which could be statutory) for businesses when supplying micro businesses; and

c. Requiring businesses to provide pre-contract information when supplying micro businesses.

This consultation only seeks views on protections for micro businesses in non-regulated sectors, it does not extend to the regulated sector nor does it cover lending to businesses.

What happens next

This consultation has now closed and we are now analysing the responses.