Information provided to tied tenants when they take on a pub will be at the heart of the PCA’s investigation into Stonegate, according to PCA Fiona Dickie.
Speaking to The MA, Dickie said the regulator’s concerns centred on whether tied tenants had been given the transparent and accurate information they needed to make key business decisions, from deciding whether to take on a pub to negotiating an appropriate rent.
Join our new WhatsApp channel: The Morning Round-Up
Get the biggest pub trade stories straight to your phone. Listen to our one-minute daily news briefing and receive breaking news, exclusives and sector updates throughout the day. Remember to turn notifications on in the top right corner! Join the channel here.
“The pubs code is based on transparency. Information is power and the Government recognised that in introducing the code,” she said.
“The code is there to rebalance the tied relationship so that these often small businesses can enter into and maintain a fair and transparent relationship with their large pub company.”
The PCA launched a statutory investigation into Stonegate this week following concerns the operator may have breached its obligations under the pubs code.
While Dickie stressed no conclusions had been reached, she said the regulator had “a reasonable suspicion” that breaches may have occurred in a number of areas between July 2021 and July 2026.
One focus of the investigation will be the information provided to prospective tenants about the condition of the pub they are taking on.
Key relationships
“The pubs code entitles tied pub tenants, including prospective tenants negotiating for a pub, to transparent and accurate information,” Dickie said.
“I’m concerned Stonegate may not have complied with those duties in a number of respects.”
She added it was “absolutely critical” that tenants entering a tied pub business understood the condition of the premises, including any repair, maintenance and improvement works that needed to be completed.
The PCA is also examining whether Stonegate provided reasonable financial information, including profit projections used to support rent negotiations.
Dickie said rents are based on forecasts of a pub’s profitability and that prospective tenants need access to reliable information to assess whether a business is viable.
“It’s absolutely vital to the viability of the tied pub that the tenant has the information they need, so they can negotiate the right rent for that pub,” she said.
The third area under investigation relates to Stonegate’s business development managers (BDMs) and whether conversations with tenants have been properly managed and recorded.
“For a partnership to work well, there has to be compliance with the Pubs Code.”
PCA Fiona Dickie
Dickie described BDM relationships as “key” as they have day-to-day contact with tied tenants, adding they are required to document any discussions around rent, repairs and business planning.
That record, she said, provides clarity around “assurances given, promises, plans and information, so there is no confusion down the line”.
Tenant concerns have also played a role in the decision to launch the investigation, although Dickie declined to she comment on individual cases due to confidentiality.
“The PCA gathers intelligence from a wide range of sources, including from tenant inquiries,” she said.
“What they have told me has directly informed the scope of the investigation.”
The regulator is now calling for current and former Stonegate tenants, as well as other third parties with relevant information, to come forward.
Dickie said those providing evidence would be protected, with information treated carefully and confidential material handled in line with the PCA’s legal duties.
She added the launch of a statutory investigation was huge for the PCA, adding it is the watchdog’s highest and most severe regulatory power.
Transparency obligations
Marking only the second formal inquiry in the PCA’s history, Dickie added it was not a decision “taken lightly”.
“I do not take this step lightly,” she continued.
“But I do believe it shows there is a regulator who, where the circumstances require it, is prepared to use all available regulatory tools to understand the extent of pub code compliance of the regulated pub companies.”
While the investigation relates to Stonegate, Dickie said the pubs code was introduced “to rebalance the tied relationship” between pub companies and tenants and that it would continue to do so.
“The key is that it is a partnership,” she added. “For a partnership to work well, there has to be compliance with the pubs code and the transparency obligations it sets.”
Dickie also urged current and former Stonegate tenants, as well as third parties with relevant information, to come forward, adding the investigation depended on building the widest possible evidence base.
Evidence can be submitted by emailing Investigations1@pubscodeadjudicator.gov.uk.
The deadline for submissions is Wednesday 12 August at 5pm. More information can be found on the PCA website.
The PCA’s findings will be published in a report once the investigation concludes.
