Business, Innovation and SkillsFurther written evidence submitted by the Federation of Small Businesses

I very much appreciated the opportunity to provide oral evidence on the Consumer Rights Bill on behalf of the Federation of Small Businesses last week.

I had wanted to follow up with you regarding an issue I raised which wasn’t pursued as a line of questioning, perhaps because quite understandably, the focus of the Committee was striking a balance between consumers and small businesses rather than small businesses as consumers.

To elaborate, during the evidence session I explained briefly that the FSB is carrying out a significant piece of work on small businesses as consumers because micro-businesses in particular, are very often consumers in exactly the same way as individuals, but they lack the same level of regulatory protections in consumer legislation.

Our research project is underway and being led by Professor Amelia Fletcher from the University of East Anglia, the former chief economist from the OFT, looking at how small businesses behave as consumers and how legislators and regulators can help protect them from unfair practice. Whilst predominately focussing on the regulated markets, such as energy and telecoms, the project will address questions such as: To what extent are suppliers required to provide information to small businesses in an easily accessible form about the products available to them? To what extent is the information provided to small businesses required not to be misleading? To what extent are small businesses protected from aggressive or otherwise inappropriate sales practices? To what extent are small businesses protected from unfair contract terms?

The project team is currently looking into the role the Consumer Rights Bill could play in helping the UK’s smallest businesses gain adequate consumer protection and we would therefore welcome the Committee to look into this further. We have approached the Department asking why they have chosen not to class small and micro businesses as consumers but have not yet received a satisfactory explanation.

The FSB believes consideration should be given as to whether small or at least micro businesses, should be classed as consumers for the purpose of the Bill to ensure the UK’s smallest businesses enjoy the same level of protection as consumers will when they are using goods and services.

We appreciate this is a complex and legally technical area but we believe this is an area that should be given thought to. I would welcome the opportunity to discuss this with you further.

Mike Cherry
National Policy Chairman, Federation of Small Businesses

16 October 2013

Prepared 20th December 2013