'Pubcos have until June 2011 to change'

By Ewan Turney

- Last updated on GMT

Related tags Law

Under the microscope: pubcos have been given a final warning
Under the microscope: pubcos have been given a final warning
Pub companies have been given until June 2011 to implement major reform or face statutory regulation, the BISC has warned.

Pub companies have been given until June 2011 to implement major reform or face statutory regulation, the Business Skills and Innovation Committee has warned.

The revised pubco report stressed that the Committee remained "firm in its resolve to see real reform in the pub industry".

"The industry must be aware that this is its last opportunity for self-regulated reform," it said. "If it cannot deliver this time, then government intervention will be necessary.

"We do not advocate such intervention at this stage, but remain committed to a resolution to all the problems discussed in this Report and those of the 2004 and 2009 Reports.

"Should those problems persist beyond June 2011, we will not hesitate to recommend that legislation to provide statutory regulation be introduced.

"We urge the Government to monitor the success or otherwise of industry initiatives for reform and to keep the possibility of a reference to the Competition Commission firmly on the agenda.

"We also urge the Office of Fair Trading to look more carefully at the issues involved as it responds to CAMRA's super-complaint for the second time.

"The serious imbalance in power between pub companies and lessees that has prompted this Report and the two earlier ones must be a matter of deep concern to policy makers who are working to ensure that markets work fairly to the benefit of consumers.

"The pub industry has been found wanting now on two occasions by committees of the House of Commons. If it fails to deliver on its promises by June 2011, it should be in no doubt what the reaction will be."

Modest step

The Report welcomed the progress made by RICS in addressing the shortcomings of its guidance on valuations but said the "acid test" would be whether the new guidance would provide clarity on the "principle that a tied tenant should be no worse off than a free of tie tenant".

The Committee concluded that the new BBPA Framework Code of Practice "appears to be a modest step in the right direction" and called for pubcos to treat it as the minimum standard of best practice.

But it warned the effectiveness of the reforms relied on the BII acting as a strong policeman.

"The successful policing of the Codes will be vital to the success of these reforms. We give a cautious welcome to the BII's role in policing the Codes of Practice.

"The BII must act as an impartial arbiter in this area and is in the best position to administer accreditation for codes and to oversee and monitor compliance.

"However, we clearly state the need for the BII to demonstrate the necessary authority and impartiality to be effective as a policeman for the industry. The success of all of the reforms proposed by the industry hinges on the credibility and effectiveness of the BII."

The Committee recommended that the new codes of practice be incorporated into the lease agreement, thus ensuring they are legally binding.

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