New retail ombudsman? - Business Works
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New retail ombudsman?

Phil McCabe of FPB
S upermarkets and their suppliers are being grilled by government officials scrutinising a bill to create a new groceries code adjudicator – or retail ombudsman to you and me.

Suppliers’ reports of unfair treatment at the hands of retail giants meant that, after a two-year inquiry, the Competition Commission introduced a much-strengthened Groceries Supply Code of Practice (GSCOP) in 2008.

It also recommended establishing an ombudsman to oversee and enforce the code, which outlines the basic standards of behaviour businesses supplying supermarkets directly can expect.

But, amid arguments from the UK’s leading retailers that the revised code of conduct is already working and that they will have to pass on the costs of the new adjudicator to customers, there are concerns that it will lack any real teeth.

In fact, contrary to what the Forum of Private Business (FPB) has called for – and the advice of the Competition Commission – the Government is adopting a ‘wait and see’ policy as far as giving the ombudsman the power to impose fines for breaches of the code, in order to gauge whether simply naming and shaming culprits and making recommendations will be enough.

Unfortunately, that wait could be three years, according to members of the Government’s Business Innovation and Skills (BIS) committee scrutinising the Bill.

And if the suggested powers prove insufficient we could see many more suppliers squeezed by supermarkets and even forced out of business in that time.

To understand the need for proper powers and real protection we must realise that the problems between supermarkets and suppliers are deeply ingrained in the culture of the trade. One leading retail boss, Iceland’s Malcolm Walker, has said it is a ‘fact of life’ that supermarkets squeeze their suppliers.

Research carried out by the Forum shortly after the original retail inquiry was launched found that 76% of respondents wanted a watchdog to oversee the GSCOP. However, a separate survey revealed that 74% of business owners believed they should be guaranteed anonymity when giving evidence to both the Competition Commission and the Office of Fair Trading (OFT).

This says a lot. There clearly remains a culture of fear – denied by supermarket representatives at the committee hearing – that prevents disgruntled suppliers from coming forward and identifying late payment or other nefarious activities.

For more about FBP:

The not-for-profit Forum of Private Business speaks out on behalf of smaller businesses which do not have a voice, for example via the late payment ‘hall of shame’, as part of the Communications Director business support solution.

Suppliers are urged to report abuses anonymously by calling the Forum on 0845 612 6266 or e-mailing

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