Making change to achieve more progress in 2022

08-Dec-2021 - Last updated on 08-Dec-2021 at 13:07 GMT

Looking to the future: pubs code adjudicator Fiona Dickie says she is looking forward to the progress she can make in 2022

As 2021 draws to a close its end is marked by the latest step I have taken to improve the way the pubs code works for tenants, and it is a big one.

Since the code was introduced in 2016 the PCA office has provided an arbitration service for handling disputes. There have been more than 600 arbitration referrals during the life of the pubs code and, though the vast majority settle, they place a significant administrative drain on resources.

To relieve that pressure I have been appointing alternative arbitrators as the law permits, but now I have gone further. After putting clear standards in place earlier this year I have just contracted the Chartered Institute of Arbitrators to handle all the casework management. Levering in experience and additional resource in this way is designed to free up more of my team’s time to focus on my regulatory agenda – ensuring the code is understood by tenants and followed by the pub companies.

So I’m looking forward to the progress I can make in 2022. This includes providing further simpler information to tenants, like the recent factsheets for new entrants and on renewals. And I will continue my focus on making the MRO process work more smoothly for tenants because although the pubs code is not just about the MRO, disputes about it have accounted for 86% of arbitration referrals. The recent small-scale survey of tenants who started the MRO process between April 2019 and April 2021 told me some important things about what more I could do to improve it.

Responding to tenants’ experiences

Fifty tenants who were either going through the MRO process or had finished it took part in the research. From 10 participating tenants who had decided to stay tied, there was overwhelming evidence for the effectiveness of the MRO process in negotiating a tied deal. Only one tenant said that they had not obtained any improvement in rent, terms or benefits, and seven reported that the MRO process positively affected their ability to negotiate their tied offer. This is the Pubs Code in action, delivering on the principle that tied tenants should be no worse off than if they were free of tie.

Knowing their Code rights and being able to access them is really important for tied tenants. The survey results also showed clearly that getting quality neutral advice can be key. Those tenants who had the help of a competent advisor through the process overwhelmingly had a much more positive experience than those without.

I draw two things from that. One is that the PCA should support measures that promote quality independent advice for tied tenants. The other is that the MRO process needs to be accessible to all tied tenants, not just those who can afford to pay for advice. Removing the financial barriers that may put them off using the process can help ensure this.

Among the things that can deter tenants is an initial free of tie rent offer that is too high, and ineffective negotiations over that rent. Both of these were tenant concerns raised in the survey, which suggested some large disparities between the free of tie rent offers made by pub companies and the market rents set by an independent assessor (IA). In general, the IA process is working well for tenants where they can’t agree the rent in negotiations, but it does introduce cost, delay, and further reliance on advisers.

Simplifying MRO

Making sure that the initial rent offer is reasonable could therefore bring tenants real benefits. As I discussed in my last MA column, I am consulting on changes to how the pub companies should deal with the MRO process. These include requiring them to justify their free of tie rent offers with supporting evidence such as levels of trading over the last three years, detailed profits valuations and forecasts of trading.

This and other changes I have proposed to how the MRO works could help make it easier for tenants to use this right in 2022 and beyond, but I want industry views before I decide whether these are the right steps to take. The consultation closes on 10 December so please take a look and let me know what you think. I really welcome your views.

I wish everyone good trading this Christmas.

This column is intended to aid industry understanding about the pubs code and its impact. Nothing in it should be understood as a substitute for the pubs code legal framework.