The pubs code turns five
‘The industry can't continue to live in the past’
Becoming pubs code adjudicator amid a global pandemic that had shuttered the industry she was appointed to regulate and instigated crises ranging from rent to reopening, Fiona Dickie took on a tough job at a very tough time in May 2020.
"Just like everybody else in the industry, Covid-19 has set me back in my plans to speed up the pace of change – for example with regards to the market rent only (MRO) option,” she tells The Morning Advertiser (MA) more than one year on. “But I'm here for the long haul and thankfully I'm a workaholic.
“I'm here to work hard, I'm not complacent and my team has a single mission – to change the culture of the regulated tied pub trade.
“The industry has to change, and it is changing, I can see evidence of that. Sometimes it feels like two steps forward and one step back, but overall things are going in the right direction."
Moving opinion forward
Five years of the pubs code
Timeline: Five years of the pubs code and PCA – The Morning Advertiser (MA) looks back on some of the pubs code's major milestones ahead of the fifth anniversary of its enforcement on 21 July.
In numbers: the PCA's five-year caseload – To mark the fifth anniversary of the pubs code coming into force on 21 July, The MA has broken down some of the numbers behind the pubs code adjudicator’s (PCA) in tray.
‘All British publicans and their families are entitled to just and fair treatment’ – The pubs code five years on. Has it been a good thing? In some ways yes, but it is still a work in progress.
It hasn’t always felt that way.
Very quickly after it came into force on 21 July 2016, the nascent PCA was engulfed in an unforeseen level of engagement and frustration from campaigners who felt the pubs code fell dramatically short of expectations.
While the regulator’s model largely replicated the groceries code adjudicator (GCA) – the GCA took on fewer than 10 arbitrations between its inception in 2013 and March 2020, while the PCA accepted 394 between its creation in July 2016 and 31 March 2020 – an average of one every three days.
Five years and more than 500 arbitrations after coming into force, Dickie reflects that, from the get-go, delay, and complexity around the pubs code – especially the MRO process – attracted negative attention. Her predecessor, Paul Newby, previously told The MA that the level of “hostility and animosity” took him by surprise.
"Quite rightly there was and is an expectation that the pubs code is going to bring real change,” she says. “It was the culmination of many years of serious concerns about the treatment of tied tenants by the largest pub owning businesses after self-regulation had failed."
However, after becoming PCA in May 2020, Dickie feels she’s done a lot to improve the processes she inherited and encourage tenants to find out more about their code rights.
“The question for me is 'how do you measure the impact of the code and how do you move public opinion forward?' One of the ways I think you do that is with actual tenant stories about how the code has helped them – like tenants who are financially tens of thousands of pounds better off having used the MRO process.
“I need to focus on getting those stories out there in a way that tied tenants can relate to so they can see the benefits for them.
“I've said before and I'll say it again, the MRO process is better, it's not yet good enough and there's more to do. But I do want the conversation to be current."
‘Industry can't continue to live in the past’
Though Dickie highlights improvements made – including becoming a more outwardly focused organisation, something she’s keen to continue – the pubs code and PCA continue to come in for criticism from across the pub sector.
Though the perceived failure to address issues around restarting businesses following more than a year punctuated by on again off again trade due to lockdown measures have been on campaigners’ lips of late, the longest standing gripe remains MRO.
Can Dickie understand and appreciate the frustrations of publicans who have lost money – or their livelihood – off the back of wayward MRO procedures?
"What really concerns me is the possibility of tenants now being put off by the retelling of historic accounts of intractable MRO disputes,” she says. “I want the conversation about MRO to be up to date, about how it is now. That's not to say it's perfect, but it is better than it was.
"Believe me, when I was appointed deputy PCA in December 2017 and there was a large arbitrations backlog, I heard the frustrations of tenants bogged down in those long cases,” Dickie adds. “My team and I have worked really hard to improve things.”
While Dickie admits the process is not as good as it could be – “it's still too slow and costly for tenants” – and hopes the statutory consultation will make it better, she stresses that it is improved and that the evidence she’s had from tenants is that with good advice it can yield good results.
“The industry can't continue to live in the past – it's time for the narrative about MRO to move on,” she says. “I've recently spoken to 50 tenants who've gone through the MRO process in the last two years.
“Some tenants have expressed concerns – including about the cost of accessing MRO, which gives me a focus now for considering next steps – but some tenants, particularly those who have had a good adviser, are really happy with the result and have saved a lot of money.
“I think it's important to acknowledge that, and that there are differences of opinion, but I do now need to look at how I can make the MRO process more predictable and straightforward for tenants."
The pubs code’s biggest strength and biggest weakness?
Biggest strength: "Information is power. The essence and power of the code is that is puts information in the hands of tenants at many points in their business relationship – when they sign up, at every rent review, during MRO by letting them compare their options, by giving them information about the condition of the premises, about their insurance, the list goes on.
“The pubs code doesn't patronise tenants by telling them what is good for their business, how much rent they should pay. What it does, and it's strength, is that it empowers them to decide them for themselves – and when tenants are informed they can negotiate more effectively and make better business decisions.
Biggest weakness: “I would say that is its complexity. There has been a lot of head scratching about what some of the provisions mean – including within my own office. Tenants are too busy for complexity and ambiguity because they've got businesses to run.
“My team is putting a lot of effort into trying to simplify things for them, like easy-to-read factsheets and social media output, to help them understand their rights. That work has to go on because understanding is the essential building block to tenants asserting their rights."
Generalisations about pubco behaviour ‘unhelpful’
According to Dickie, the statutory consultation on the pubs code demonstrates that the legislation continues to be taken seriously by Government and that a “more predictable and straightforward” MRO process is achievable.
“Tenants don't want a complex process and I'd encourage people to consider the options that are being put forward by the Government and make their views known,” she says.
“The Government is also seeking views on changing the route for appealing an arbitration award – at present, the appeal is to the high court and that is an incredibly frightening and costly prospect for a tied tenant and if an alternative can be found which is more accessible, I think that would be a good thing.”
Having highlighted the positive intentions for the code and her office from Government, does Dickie also believe the regulated pub companies take the code seriously?
"It's important to acknowledge that the six pub companies that I regulate are all very different – because of that, generalisations about how they behave aren't helpful,” she explains. “For example, I've almost always been impressed by how Admiral shows its commitment to fair dealing with its tenants, and on the other hand some pub companies have repeatedly challenged me on regulatory steps I've taken, and they still do.
“It takes serious determination to do this job, but I am often helped by the pub company code compliance officers,” she adds. “What I can say is the pub companies take me seriously and they'd be foolish not to.”
According to Dickie, pub companies know that they'll find themselves at higher risk of regulatory action if they are aware of non-compliance and then don't inform the PCA and put things right for themselves.
“Parliament has given me enforcement powers, and that includes power to investigate and fine them if I find non-compliance,” she continues. “That's something they don't want, so what I've told the pub owning businesses is that assurances they take pubs code compliance seriously do not move me, I'm only interested in evidence they're complying – evidence I can see with my own eyes and hear with my own ears. “
Landmark moment: the PCA’s first investigation
According to Dickie, the pubs code adjudicator’s first investigation into code noncompliance represents a watershed moment for the industry regulator and is, for her, the key landmark in the pubs code and her office’s first five years.
After the industry regulator launched the investigation in July 2019, PCA Fiona Dickie fined Heineken’s pub arm, Star Pubs & Bars, for “seriously and repeatedly” breaching the pubs code over nearly three years in October 2020 – a charge the operator said it was 'actively considering' appealing.
The industry regulator concluded that the nature and seriousness of the 12 breaches uncovered had “frustrated the principles of the pubs code” and merited a financial penalty, which would act as a deterrent to all regulated pub-owning businesses from future non-compliance.
As a first for her office, Dickie believes the investigation “broke new ground”.
"In the Star investigation I found that it didn't take it's code compliance function sufficiently seriously – it tasked its code compliance officer with ensuring the pubs code was interpreted as a commercial benefit of Heineken UK,” she explains. “I found that was a breach of the pubs code.
“I expect my investigations to be a lesson for all of the regulated pub companies about how seriously they must take this and the potential consequences for them if they don't."
On top of this, Dickie believes the investigation – which handed Heineken’s pub-operating arm a £2m fine – showed the industry her determination to “root out non-compliance”.
“It was a very thorough process and it's important that tenants are going to have confidence in the pubs code and confidence in my readiness to act when their rights are not respected that everybody can see the potential consequences of breaching the code,” she adds.
“What's really important to understand also about the investigation is that Star is now following my recommendations, and that includes offering to change non-compliant lease terms that are already in the market, at no expense to tenants. That, I think, shows how powerful the code can be in its scope, when it is effectively enforced."
‘A more public facing role’
Looking ahead to the next five years of the pubs code and the office of the PCA, overall, Dickie hopes that the regulator can move towards simpler processes for tenants and a more accessible MRO.
“We will have to await the outcome of the statutory consultation and see what changes to the code the secretary of state decides to make,” she adds, “and of course there's another statutory review next year, and it's not time to predict the outcome of that.
"I'm also very focused on new tenants and making sure that not only they get the information they're entitled to, and not as a tick box exercise, but it's presented in a way that they will understand so that they can make an informed decision about whether to take on a pub."
As far as her own personal plans, Dickie hopes that tenants will see a lot more of her in person as the industry emerges from a Covid-19 restrictions – ever-present since she became PCA in May 2020.
“I want a more public facing role,” she says. “Like everybody I've been working from home for a long time and it's difficult to deliver a message remotely.
“I want to get out and about more in person and through all the other channels we've introduced so I can speak to tenants in as many ways as possible."
