PCA updates Regulatory Compliance Handbook’s MRO guidance

By Stuart Stone contact

- Last updated on GMT

Close watch: 'I’m keeping a close eye on how the Handbook and other innovations are influencing pub-owning business behaviour so I can consider whether and how to exercise additional regulatory powers' Fiona Dickie explained
Close watch: 'I’m keeping a close eye on how the Handbook and other innovations are influencing pub-owning business behaviour so I can consider whether and how to exercise additional regulatory powers' Fiona Dickie explained

Related tags: Licensing, Legislation, Property, Pubs code, Pubs code adjudicator

The office of the pubs code adjudicator (PCA) has published a revised edition of its Regulatory Compliance Handbook featuring an updated chapter on market-rent-only (MRO) option proposals.

Originally published in November 2019, the handbook’s chapter on MRO proposals sought to ensure that a pub-owning business provides its tied tenant with full information about how it justifies its MRO proposal as compliant.

However, this chapter, and the first three chapters of the handbook dealing with pub-owning business’ communications with tenants, business development managers as well as MRO communications and the process originally published in December 2017, have now been reissued by the industry regulator.

“I know for tenants to satisfy themselves that they are no worse off under their tied agreement than they would be if they were free of tie, they must freely be able to exercise their right to a compliant MRO option,” PCA Fiona Dickie said. 

“The law gives the pub-owning business the sole power to propose MRO terms, so holding them to account for how they do that is important.

“Tied tenants know that the MRO experience has been far from perfect. Too many MRO requests end up in arbitration, even though there are now fewer new disputes and they are not taking as long as they did. 

“Ministers have heard the MRO concerns of stakeholders, including the PCA, in responses to the statutory review.

“In the meantime, I’m keeping a close eye on how the handbook and other innovations, like the initial stay in arbitration proceedings, are influencing pub-owning business behaviour so I can consider whether and how to exercise additional regulatory powers to further reduce disputes and improve the MRO experience for tied pub tenants.”

Revisions revealed

The Regulatory Compliance Handbook outlines the minimum standards of behaviour that the PCA expects from pub owning businesses regulated by the pubs code to adopt. 

Updates revealed by the PCA on 11 September include clarifying that pubs code regulations apply to the preparation of all MRO proposals, including revised responses provided during the course of negotiations, or as ordered by the arbitrator following arbitration.

What’s more, the Handbook has been edited to reference recent court judgements and confirm the length of a proposed MRO tenancy must be reasonable. The pub-owning business cannot simply offer the remaining term of the existing tenancy without also considering whether that is reasonable in the circumstances.

Finally, revisions attempt to make it explicit that when preparing a MRO offer, the pub-owning business must complete a compliance checklist and declaration not only to record the decisions they have made in each case about compliance, but also to explain why they have made those decisions. This can be found towards the end of the Handbook, and the PCA encourages tied tenants to ask for a copy of the checklist to aid them in negotiations.

Related topics: Legislation

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