Small businesses must comply with a potentially considerable volume of regulation, varying according to their business activities, but there is no “regulator of small businesses” as such.
Some regulation has been created to help small businesses, especially when it comes to being paid on time by their customers, and this includes the creation of the Office of the Small Business Commissioner (SBC).
| What is the Office of the Small Business Commissioner (“SBC”)? |
The SBC has a dispute resolution remit, as explained below, and is not a regulator that makes or enforces rules. However, the SBC plays a significant role in the regulatory framework impacting small businesses. The Commissioner is an individual, but we generally refer here to the Commissioner’s office as an entity (and “it” rather than he or she). |
| What is its role? |
The SBC’s function is to consider complaints from small businesses relating to payment for the supply of goods and services to larger businesses and to make recommendations to the parties involved following its consideration. It is also empowered to provide general advice and information to small businesses. Since 2020 it is has been responsible for administering the Prompt Payment Code by maintaining the list of voluntary subscribers to the Code and working with the Government to further strengthen it. Its role is described more fully in its website. |
| What is the legal basis for its powers and objectives? | It was established by the Enterprise Act 2016. |
| What is its legal form? | It is a body corporate sole (with powers held by an individual, the Commissioner). It is not part of the civil service. It is described as “independent of government” (but the Commissioner is appointed by the Secretary of State). According to its annual report and accounts 2020-21 it is classified as a Non-Departmental Public Body. |
| Does it have powers of investigation or enforcement? |
It has limited formal powers to investigate complaints from small businesses with fewer than 50 employees about late/overdue payments from larger customers with more than 50 employees. It has no remit to investigate complaints by small firms against other late-paying small firms, or firms in the construction sector. If, upon investigation, the complaint is upheld by the SBC, it can recommend steps to resolve the dispute. Its recommendations in respect of a complaint are not legally enforceable. However, it has power to publish a report on the consideration and determination of a complaint. As administrator for the Prompt Payment Code, which is voluntary, the SBC can request information in connection with a Code signatory about which a complaint has been made. The investigation will be into whether the signatory is in breach of the Code. It can recommend to the Department of Business and Trade that consideration be given to suspension or removal of a signatory from the Code. |
| How is it funded? | It is funded by the Department of Business and Trade (ie, by taxes) and falls within the departmental budgetary control limits set by HM Treasury. |
| How is it held accountable to a higher body? |
The Commissioner must publish an annual report and send it to the Secretary of State. Each annual report should contain information which is useful to the Secretary of State in reviewing the Commissioner as well as to users of the Small Business Commissioner generally. The Secretary of State must lay a copy of the report before Parliament. The Secretary of State is required to review the Commissioner’s performance every three years. Following a review, the Secretary of State must publish a report of the findings and lay a copy before Parliament. The Secretary of State may direct the Commissioner to provide information for the review and must assess how effective the Commissioner has been in carrying out his or her functions. The Commissioner may be subject to investigation by the Parliamentary Ombudsman under the Parliamentary Commissioner Act 1967. It is on the list of public authorities covered by the Freedom of Information Act 2000. |
| Do the Principles of Good Regulation apply to it? | No, as it does not make rules and has limited powers of enforcement. |
| Does the Regulators’ Code apply to it? | No, as it does not make rules and has limited powers of enforcement. |
| Does it apply to the whole of the UK? | Yes. |
| Are the any notable international aspects? |
No. |
| Are there proposals for significant change? |
Government consulted on the role of SBC in 2020 and again in 2023 as part of its Payment and Cashflow Review. It also consulted on the Late Payment Regulations in 2023. Matters under review include:
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Better Regulation project
The Better Regulation project aims to help ICAEW and its members understand how the UK’s regulatory regime might be improved and to use our insights to call for change.
