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PICA-Service: how does it work?

By Michelle Perrett , 09-Jan-2013
Last updated on 09-Jan-2013 at 13:39 GMT

Related topics: General News, Business Support

When the Government agreed the self-regulation deal over the pubco-tenant relationship one of the major actions was the setting up of a Pubs Independent Conciliation & Arbitration Service or, as it is now called, PICA-Service.

Arbitration: PICA-Service chairman Rodger Vickers  and PIRRS chairman Bernard Brindley

Arbitration: PICA-Service chairman Rodger Vickers and PIRRS chairman Bernard Brindley

The PICA-Service panel arbitrates in disputes for tied tenants and lessees whose pubcos are bound by the Industry Framework Code. It can only act where the licensee has been through the pubco dispute procedure, but failed to resolve the issue.

The first three cases have been heard by the PICA-Service panel — all concerned Enterprise Inns — the first two ruled in favour of the licensee, while in the third Enterprise was found not to have breached its code of practice.

While some outspoken supporters of statutory regulation have raised concern about the independence of the service and the way it works, Bernard Brindley, chairman of the Pubs Independent Rent Review Scheme (PIRRS), the organisation that is overseeing the new service, claims this is unfounded.

He said: “I chair the board of PIRRS as an independent chairman and Rodger Vickers chairs the actual panel hearings. Even as chairman of the board I am not privy to what happens at a panel hearing — so no board member sits on a panel hearing. That gives complete independence to the whole process.

“My independence comes from being a licensee for the past 46 years.”

The PIRRS board is run by an amalgamation of the Federation of Licensed Victuallers Associations (FLVA), Guild of Master Victuallers (GMV), Association of Licensed Multiple Retailers (ALMR), British Beer & Pub Association (BBPA) and BII (British Institute of Innkeeping). These five organisations now oversee the PICA-Service.

Brindley added: “The fact that the licensee is represented by the FLVA, GMV, BII — the majority of its membership is licensees — and ALMR, although a lot of their members are multiples they are multiples of licensees. So the licensee has got four avenues of representation through the PIRRS board. The pub companies are only represented by the BBPA.”

Under the terms of the PICA-Service a panel will hear each case. Brindley explained that putting together a list of 25 panel members, of which five are expected to act in any case, was a stringent process.

Each of the five organisations that are on the board put forward 10 suggestions, and to be accepted on the panel an individual had to be unanimously agreed upon by all of the organisations. “That is transparency as far as I am concerned.

“We try to have a solicitor, surveyor, accountant, licensee and a pubco expert — so each panel hearing has a balance,” he said. 
Criticism has been levelled against the PICA-Service for the lack of transparency in cases and rulings. However, he argued that a certain level of confidentiality is required to make the system work.

“I know there is a criticism out there about why the hearings can’t be more transparent. During the process there is a lot of confidentiality as you are talking about two businesses, and a lot of their business and figures are confidential. We can’t breach confidentiality because it is private to those businesses.”

He said that the intention has always been to name the pubco and the decisions ruled from the outset. While he admits there have been some initial hiccups, the process has been tidied up with the licensee now being asked whether they wish to be identified and their pub named.

“The biggest advantage to the PICA-Service and the codes of practice is the pubco being found not acting within the spirit of the code. That is so strong.

“If the panel feels that the pub company could have done better, communicated better or acted quicker then they have the ability to say it did not act within the spirit of the code. And that is so valuable to the licensee.”

PICA-Service procedure

Brindley said when a grievance is submitted to the PICA-Service and it is considered as a potential case then the pubco code of practice procedures can be overruled. For example, he said it could take up to three months to deal with a grievance according to a pubco code of practice. Brindley said: “We are saying this is not acceptable; the pubco has 14 days’ notice to respond. If it responds within 14 days and tells us that the internal grievance procedure has not been completed we give them a further 21 days to complete it.

“The PICA-Service overrides the code of practice. Now the pubco has a maximum of 35 days and they have to complete within that time.”

He said it is imperative that action is taken quickly to ensure the licensee has a chance to deal with any business problems.

“My concern is that if you have a licensee who is in financial difficulty and you have to go via an internal process that is going to take three months it is not fair to the licensee. We’d expect the pubco to make it quicker. But we also have to accept the pubco view that they have these layers.

“If you have a pubco with 5,000 to 6,000 tenants/lessees the numbers are stacked up against you. It is not surprising to see larger pubcos with more cases.”

Chairman Rodger Vickers

Rodger Vickers is chairman of the PICA-Service panel, which makes the decision on code-breach cases. Vickers came under criticism when he was appointed to the role as it was thought that he could face problems of independence. However, he rejects this claim.

“All of my work is dispute resolution mainly in rent reviews, but also in fraud and professional negligence cases.

“I also act as an expert witness, although not as much as I used to. My involvement is on the PIRRS website and lists all the cases I have been involved in — it is all transparent.”

His vice-chair is Trevor Barber, who is a senior acting judge. He has asked to sit on the first panels and the idea is that he will alternate with Vickers to chair the panels.

Vickers believes the new system is working well and that the PICA-Service system has the ability to help tenants. “It is not uncommon for arbitration costs to hit £20,000. Tenants just can’t afford to take that risk.”

He believes the panel features a strong list of independent individuals who are capable of making the right decisions in arbitration cases. All of those on the panel have experience of the licensed trade except Barber, but all have received full training in arbitration and conflicts of interest.

Vickers, along with the panel members, does not get involved in a case until a hearing is set and the evidence is sent to them to consider.  

He said: “The panel receives the written documentation ahead of the hearing. As part of this the tenant makes a statement, which is restricted to three sides of A4.

“If the licensee needs more than this they can ask for a special dispensation. Then there is 10 pages of complaint from the licensee and 10 pages of response from the pubco. In addition, the licensee has the opportunity to reply to the pubco’s response in five pages.”

The panel then collates a list of questions arising from the evidence to ask during the hearing. Both parties — the tenant and the pubco — have 20 minutes each to present their case to the panel.

Vickers believes it is essential that a decision is made on the day of the hearing from the evidence presented.

“The chairman does not have a vote as I am not supposed to influence the panel. I have a casting vote if there is deadlock. If it is tied I have the ability to cast a deciding vote, although that has not happened yet.”

Finding funds - How is the PICA-Service funded and money spent?

There is a levy placed on each pubco and family brewer according to the number of tied tenants and leases they have within their estate.

This is levied by the BBPA and the BII administrates the PIRRS and PICA-Service for a fee. The cost of a hearing is around £1,500, which covers travel costs for panel members.

All panel members give their time for free. The cases have been heard at the BBPA’s offices in London as they are free as well.

Other crucial facts

  • The PICA-Service can onlydeal with cases subsequent to 30 June 2010.
  • The cost of taking a case is £200 — the licensee gets this back if they win the case.
  • If the licensee wishes to be represented they do have the right to a solicitor and the pubco is offered the same right. But a pubco cannot simply turn up with legal representatives.
  • When a tenant complains, the PICA-Service will write to the pubco within two days to check the licensee has been through the grievance procedure.
  • If damages are awarded in favour of the tenant then they are invited to put in a claim for the costs of going to the PICA-Service (such as travel and administration fees) within a certain time frame. But if the licensee uses a lawyer this is not covered by the rule.
  • Any pubcos found consistently in breach can have their code of practice accreditation withdrawn or they will be brought before the BIIBAS (BII Benchmarking & Accreditation Services) board and told they have to improve

PICAS in numbers

41: the number of PICA-Service inquiries
13: the number of live cases
6: the number that are active, in that the pubco has been put on notice
5: the number of cases closed; the parties have either resolved the case or the licensee has withdrawn
2: the number of cases stalled at the request of the licensee

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