Iain Wright MP, chair of the BIS Committee, has written to the Secretary of State, Greg Clark, calling on him to reopen the appointment process and choose a candidate "who can attract the confidence of tenants as well as pub companies".
Newby’s appointment has been under intense scrutiny after campaigners complained about his time working with pubcos at his former job with Fleurets.
Newby was appointed by Clark’s predecessor in March with responsibility for enforcing the pubs code. The adjudicator will be responsible for resolving disputes between tenants and pubcos, and investigating abuses of the code.
The BIS Committee held an inquiry into his role and responsibilities, hearing from representatives of pubcos, tied tenants and Newby.
Campaigners complained about Fleurets receiving a significant proportion of its fee income from pubcos, and his continued financial interest in the company.
Evidence supplied from the campaigners exclusively to The Morning Advertiser - and presented to officials at BIS - revealed a series of issues around RICS guidance on conflict of interests.
Newby has continuously denied there is a conflict of interest - and has been transparent about his current position with his former firm Fleurets, which he is still financially tied to through a loan-agreement.
The guidance's 'overriding principles' state: "Every dispute resolver should be, and can seen to be, impartial at the time of accepting an appointment" - an issue that the BIS committee agreed with the British Pub Confederation is not the case.
Iain Wright MP, chair of the Business, Innovation and Skills Committee, said: "While the Committee has no reason to question Paul Newby's integrity or his qualifications for the job, his long-standing relationship with pubcos through his past work and a continued financial connection has created a strong perception of a conflict of interest.
“The Pubs Code has the potential to significantly improve the embittered relationship between pubcos and many of their tenants, but it will only work if the adjudicator is seen to be independent and is able to command the confidence of all the industry's stakeholders.
“The Committee would like to see a new pubs code adjudicator appointed from outside the sector, to ensure that this important role is - and is seen to be - completely independent and impartial."
Wright highlighted in his letter to Clark how a large number of tied tenants have historically been disadvantaged by an imbalance of power between tenants and some large pubcos. It has left many tenants struggling to make a decent living in a system that is stacked against them.
Paul Newby said the letter had been received and he will respond in due course.
A spokesperson for the Pubs Code Adjudicator said: “The adjudicator has previously worked with pub tenants and companies alike, which was known throughout the appointment process. A recent review of that process by the Commissioner for Public Appointments indicated that he was satisfied that the panel was entitled to conclude there were no conflicts of interest that could call into question the adjudicator’s ability to do the job.
“The pubs code is now in force and the Adjudicator remains committed to overseeing its implementation to promote fair and lawful dealings between pub companies and tied tenants. The most pressing issue is to raise the profile of the code to help ensure tied tenants are aware of their rights and are no worse off as a result of any product or service tie.”
The PCA is an appointment not subject to Select Committee pre-appointment scrutiny.