Small Business, Enterprise and Employment Bill (HC Bill 11)

Part 1 Access to finance

Assignment of receivables

1 Power to invalidate certain restrictive terms of business contracts

(1) 5The appropriate authority may by regulations make provision for the purpose
of securing that any non-assignment of receivables term of a relevant
contract—

(a) has no effect;

(b) has no effect in relation to persons of a prescribed description;

(c) 10has effect in relation to persons of a prescribed description only for such
purposes as may be prescribed.

(2) A “non-assignment of receivables term” of a contract is a term which prohibits
or imposes a condition, or other restriction, on the assignment (or, in Scotland,
assignation) by a party to the contract of the right to be paid any amount under
the contract or any other contract between the parties.

(3) 5A contract is a relevant contract if—

(a) it is a contract for goods, services or intangible assets (including
intellectual property) which is not an excluded financial services
contract, and

(b) at least one of the parties has entered into it in connection with the
10carrying on of a business.

(4) An “excluded financial services contract” is a contract which—

(a) is for financial services (see section 2) or is a regulated agreement
within the meaning of the Consumer Credit Act 1974 (see section 189 of
that Act); and

(b) 15is of a prescribed description.

(5) “Prescribed” means prescribed by the regulations.

(6) The “appropriate authority” means—

(a) in relation to contracts to which the law of Scotland applies, the Scottish
Ministers, and

(b) 20in relation to other contracts, the Secretary of State.

(7) The power of the Scottish Ministers to make regulations under this section
includes power to make such provision as the Scottish Ministers consider
appropriate in consequence of the regulations.

(8) The power conferred by subsection (7) includes power—

(a) 25to make transitional, transitory or saving provision;

(b) to amend, repeal, revoke or otherwise modify any provision made by
or under an enactment (including an enactment contained in this Act
and any enactment passed or made in the same Session as this Act).

(9) In subsection (8) “enactment” includes an Act of the Scottish Parliament.

(10) 30Regulations under this section—

(a) if made by the Scottish Ministers, are subject to the affirmative
procedure;

(b) if made by the Secretary of State, are subject to affirmative resolution
procedure.

2 35Section 1(4)(a): meaning of “financial services”

(1) In section 1(4)(a) “financial services” means any service of a financial nature,
including (but not limited to)—

(a) insurance-related services consisting of—

(i) direct life assurance;

(ii) 40direct insurance other than life assurance;

(iii) reinsurance and retrocession;

(iv) insurance intermediation, such as brokerage and agency;

(v) services auxiliary to insurance, such as consultancy, actuarial,
risk assessment and claim settlement services;

(b) 45banking and other financial services consisting of—

(i) accepting deposits and other repayable funds;

(ii) lending (including consumer credit, mortgage credit, factoring
and financing of commercial transactions);

(iii) financial leasing;

(iv) 5payment and money transmission services (including credit,
charge and debit cards, travellers’ cheques and bankers’ drafts);

(v) providing guarantees or commitments;

(vi) financial trading (as defined in subsection (2));

(vii) participating in issues of any kind of securities (including
10underwriting and placement as an agent, whether publicly or
privately) and providing services related to such issues;

(viii) money brokering;

(ix) asset management, such as cash or portfolio management, all
forms of collective investment management, pension fund
15management, custodial, depository and trust services;

(x) settlement and clearing services for financial assets (including
securities, derivative products and other negotiable
instruments);

(xi) providing or transferring financial information, and financial
20data processing or related software (but only by suppliers of
other financial services);

(xii) providing advisory and other auxiliary financial services in
respect of any activity listed in sub-paragraphs (i) to (xi)
(including credit reference and analysis, investment and
25portfolio research and advice, advice on acquisitions and on
corporate restructuring and strategy).

(2) In subsection (1)(b)(vi) “financial trading” means trading for own account or
for account of customers, whether on an investment exchange, in an over-the-
counter market or otherwise, in—

(a) 30money market instruments (including cheques, bills and certificates of
deposit);

(b) foreign exchange;

(c) derivative products (including futures and options);

(d) exchange rate and interest rate instruments (including products such as
35swaps and forward rate agreements);

(e) transferable securities;

(f) other negotiable instruments and financial assets (including bullion).

Business payment practices

3 Companies: duty to publish report on payment practices

(1) 40The Secretary of State may by regulations impose a requirement, on such
descriptions of companies as may be prescribed, to publish, at such intervals
and in such manner as may be prescribed, prescribed information about the
company’s payment practices and policies relating to relevant contracts of a
prescribed description.

(2) 45For the purposes of this section—

• “company” has the meaning given by section 1(1) of the Companies Act
  2006 (but see subsection (3));

Small Business, Enterprise and Employment BillPage 4

• a contract is a “relevant contract” if—

  (a)

  it is a contract for goods, services or intangible assets (including
  intellectual property), and

  (b)

  the parties to the contract have entered into it in connection
  5with the carrying on of a business;

• “prescribed” means prescribed by the regulations.

(3) The regulations may not impose a requirement on a company in relation to any
time during which—

(a) it qualifies as a micro-entity for the purposes of section 384A of the
10Companies Act 2006,

(b) the small companies regime under that Act applies to it (see section 381
of that Act), or

(c) it qualifies as medium-sized for the purposes of section 465 or 466 of
that Act.

(4) 15“The company’s payment practices and policies” has such meaning as may be
prescribed and the information which may be prescribed may, in particular,
include information—

(a) about the standard payment terms of the company and whether these
are part of any code of conduct or code of ethics of the company,

(b) 20about payment terms of the company which are not standard,

(c) about the processing and payment of invoices,

(d) by reference to such codes of conduct or standards as may be
prescribed and as are applicable to companies generally or to
companies of a prescribed description,

(e) 25about disputes relating to the payment of invoices, including any
dispute resolution mechanism that the company uses,

(f) about payments incurred by the company due to late payment of
invoices.

(5) The regulations may require that information published in accordance with the
30regulations must be approved or signed by such description of person as may
be prescribed.

(6) The regulations may require such of the information required to be published
as may be prescribed to be given, in such form as may be prescribed, to
prescribed persons.

(7) 35The regulations may make provision for a prescribed breach by a prescribed
description of person of a requirement imposed by the regulations to be an
offence punishable on summary conviction—

(a) in England and Wales, by a fine;

(b) in Scotland or Northern Ireland, by a fine not exceeding level 5 on the
40standard scale.

(8) Before making regulations under this section the Secretary of State must
consult such persons as the Secretary of State considers appropriate.

(9) Regulations under this section are subject to affirmative resolution procedure.

Credit information

4 Provision of credit information on small and medium sized businesses

(1) The Treasury may make regulations (“credit information regulations”) that
impose—

(a) 5a duty on designated banks to provide information about their small
and medium sized business customers to designated credit reference
agencies, and

(b) a duty on designated credit reference agencies to provide information
about small and medium sized businesses to finance providers.

(2) 10The regulations must provide that the duty in subsection (1)(a) only applies
where—

(a) a credit reference agency makes a request to a bank, and

(b) the business customer to whom the information relates has agreed to
the information being provided to a credit reference agency.

(3) 15The regulations must provide that the duty in subsection (1)(b) only applies
where—

(a) a finance provider makes a request to a credit reference agency, and

(b) the business to whom the information relates has agreed to the
information being provided to the finance provider.

(4) 20The regulations may provide that the duty in subsection (1)(b) only applies
where other conditions are met, such as the finance provider—

(a) complying with the credit reference agency’s terms and conditions, and

(b) providing information on its small and medium sized business
customers to the credit reference agency (subject to the agreement of
25those customers).

(5) The regulations must describe the information—

(a) to which the duty in subsection (1)(a) applies;

(b) to which the duty in subsection (1)(b) applies;

(c) which may be required as mentioned in subsection (4)(b).

(6) 30The regulations may make provision about—

(a) how a request for information must be made by a credit reference
agency or finance provider;

(b) the time period within which information must be provided following
a request;

(c) 35the form in which information must be provided;

(d) how a business may indicate agreement for the purposes of subsection
(2)(b), (3)(b) or (4)(b) (and for the purposes of subsection (2)(b) this may
include imposing an obligation on a designated bank to seek
agreement).

(7) 40The regulations must make provision for the designation of banks and credit
reference agencies by the Treasury, and the regulations may in particular
provide for—

(a) conditions that must be met before a bank or credit reference agency
may be designated;

(b) 45considerations that the Treasury may take into account before deciding
whether to designate a bank or credit reference agency;

(c) the Treasury to consider the advice of another person before making a
designation;

(d) the procedure for designating a bank or credit reference agency;

(e) how the list of designated banks and credit reference agencies must be
5published;

(f) the revocation of a designation.

(8) For the purposes of this section, a business is a small or medium sized business
if—

(a) it has an annual turnover of less than £25 million,

(b) 10it carries out commercial activities,

(c) it does not carry out regulated activities as its principal activity, and

(d) it is not owned or controlled by a public authority.

Credit information regulations may make further provision about the
businesses to which they apply (including provision about the calculation of
15turnover and the determination of control).

(9) In this section—

• “designated bank” means a bank that has been designated by the Treasury
  by virtue of subsection (7);

• “designated credit reference agency” means a credit reference agency that
  20has been designated by the Treasury by virtue of subsection (7);

• “finance provider” means a body corporate that lends money or provides
  credit, or arranges or facilitates the provision of debt or equity finance,
  in the course of a business (and credit information regulations may
  make further provision about the finance providers to which they
  25apply);

• “public authority” has the same meaning as in the Freedom of
  Information Act 2000 (see section 3 of that Act);

• “regulated activities” has the same meaning as in the Financial Services
  and Markets Act 2000 (see section 22 of that Act).

(10) 30The Treasury may by regulations change the figure for the time being specified
in subsection (8)(a).

(11) Before making regulations under subsection (10) the Treasury must consult
such persons as they consider appropriate.

(12) Regulations under subsection (10) are subject to negative resolution procedure.

5 35Section 4: supplementary provision

(1) Credit information regulations may make provision enabling the Financial
Conduct Authority to take action for monitoring and enforcing compliance
with the regulations.

(2) The regulations may apply, or make provision corresponding to, any of the
40provisions of the Financial Services and Markets Act 2000 or subordinate
legislation made under that Act, with or without modification.

(3) Those provisions include in particular—

(a) provisions about investigations, including powers of entry and search
and criminal offences;

(b) 45provisions for the grant of an injunction (or, in Scotland, an interdict) in
relation to a contravention or anticipated contravention;

(c) provisions giving the Financial Conduct Authority powers to impose
disciplinary measures (including financial penalties) or to give
directions;

(d) provisions giving a Minister of the Crown (within the meaning of the
5Ministers of the Crown Act 1975) or the Financial Conduct Authority
powers to make subordinate legislation;

(e) provisions for the Financial Conduct Authority to charge fees.

(4) Credit information regulations may make provision that enables complaints
about the activities of designated credit reference agencies to be dealt with
10under the scheme established by Part 16 of the Financial Services and Markets
Act 2000 (financial ombudsman scheme), and for that purpose the regulations
may—

(a) apply, or make provision corresponding to, any of the provisions of
that Part or rules made under that Part (with or without modifications);

(b) 15impose obligations on—

(i) the Financial Conduct Authority;

(ii) the scheme operator (within the meaning of that Part);

(iii) an ombudsman (within the meaning of that Part).

(5) Credit information regulations may impose a duty on designated credit
20reference agencies to provide information received by virtue of section 4(1)(a)
to the Bank of England, and may allow the Bank of England to share that
information with prescribed persons or for prescribed purposes; but the
regulations must include provision protecting the confidentiality of
information so provided.

(6) 25Credit information regulations may provide that a failure to comply with a
duty imposed by virtue of section 4(1) may be actionable at the suit of a person
who has suffered loss as a result of it (subject to the defences and other
incidents applying to actions for breach of statutory duty).

(7) Credit information regulations may provide that the following provisions
30apply to designated credit reference agencies in the same way as they apply to
credit reference agencies within the meaning of those provisions—

(a) sections 157 to 160 of the Consumer Credit Act 1974 (duties to disclose
and correct information) and regulations made under those sections;

(b) section 7 of the Data Protection Act 1998 (right of access to personal
35data) and regulations made under that section;

(c) section 9 of the Data Protection Act 1998 (right of access to personal
data where data controller is credit reference agency) and regulations
made under that section.

(8) Credit information regulations may provide a small or medium sized business
40with the right to apply to a court for an order to rectify, block, erase or destroy
data held about the business by a designated credit reference agency.

(9) The first credit information regulations that are made are subject to affirmative
resolution procedure.

(10) Any subsequent credit information regulations are subject to negative
45resolution procedure.

(11) In this section—

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• “credit information regulations”, “designated credit reference agency”
  and “small or medium sized business” have the same meanings as in
  section 4;

• “subordinate legislation” has the same meaning as in the Interpretation
  5Act 1978.

6 Disclosure of VAT registration information

(1) The Commissioners for Her Majesty’s Revenue and Customs may disclose to
a person (“P”) any of the information included in the VAT registration of
another person (“V”) if the disclosure is for the purpose of enabling or assisting
10P to assess—

(a) V’s creditworthiness,

(b) V’s compliance with regulatory requirements relating to financial
matters, or

(c) the risk of fraud by V.

(2) 15But subsection (1) does not authorise the Commissioners to disclose any
information which is, in the Commissioners’ view, financial information
relating to any business carried on by V.

(3) If VAT registration information is disclosed to a person in accordance with
subsection (1), that person must not further disclose any of the information
20unless the Commissioners consent to the disclosure.

(4) If VAT registration information is disclosed to a person in accordance with
subsection (3) or this subsection, that person must not further disclose any of
the information unless the Commissioners consent to the disclosure.

(5) A person does not contravene subsection (3) or (4) by disclosing a financial
25assessment made wholly or partly in reliance on the VAT registration
information, if the financial assessment itself does not include any VAT
registration information.

(6) If VAT registration information is disclosed to a person in accordance with
subsection (1), (3) or (4), that person must not use that information except for
30the purposes of making a financial assessment.

(7) A person does not contravene subsection (6) by using, for any purpose, a
financial assessment made wholly or partly in reliance on the VAT registration
information.

(8) The Commissioners for Her Majesty’s Revenue and Customs may make
35arrangements with any person about disclosures of information to that person
(the “recipient”) under subsection (1).

(9) The arrangements may (in particular) provide for—

(a) a fee to be payable by the recipient for the disclosure of information;

(b) conditions to apply to the recipient in relation to information disclosed
40(including conditions relating to the transfer, holding and processing of
the information);

(c) financial penalties to be payable by the recipient for a failure to meet
conditions which apply to the recipient under the arrangements.

(10) The Treasury may, by regulations, amend this section so that it authorises the
45Commissioners to disclose VAT registration information included in a
person’s VAT registration for additional purposes.

(11) In this section—

• “financial assessment” means an assessment of a kind mentioned in
  subsection (1)(a), (b) or (c);

• “VAT registration” means registration under the Value Added Tax Act
  51994;

• “VAT registration information” means information of the kind that the
  Commissioners are authorised to disclose under subsection (1) (as read
  with subsection (2)).

(12) Regulations under this section are subject to affirmative resolution procedure.

7 10Offences for the purposes of section 6

(1) A person commits an offence if the person discloses information in
contravention of section 6(3) or (4).

(2) It is a defence for a person charged with an offence under subsection (1) to
prove that the person reasonably believed that the disclosure of the
15information was lawful.

(3) A person commits an offence if the person uses information in contravention
of section 6(6).

(4) It is a defence for a person charged with an offence under subsection (3) to
prove that the person reasonably believed that the use of the information was
20lawful.

(5) Section 19(4) to (7) of the Commissioners for Revenue and Customs Act 2005
apply to an offence under this section as they apply to an offence under section
19 of that Act.

(6) This section is without prejudice to the pursuit of any remedy or the taking of
25any action in relation to a contravention of section 6(1), (3), (4) or (6) (whether
or not this section applies to the contravention).

Exports

8 Disclosure of exporter information

(1) The Commissioners for Her Majesty’s Revenue and Customs may, by
30regulations, make provision authorising officers of Revenue and Customs to
disclose prescribed information about the export of goods from the United
Kingdom.

(2) In subsection (1) “prescribed information” means information of a kind that is
prescribed in the regulations.

(3) 35But the regulations may only prescribe the following kinds of information—

(a) the commodity code of goods that have been exported from the United
Kingdom (a “prescribed code”);

(b) a description of the category of goods covered by a prescribed code;

(c) the names and addresses of persons who have exported goods covered
40by a prescribed code;

(d) the years and months in which a particular person has exported goods
covered by a prescribed code.