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Unfair contract
terms costing small
firms billions
»»NEW RESEARCH FROM THE
Federation of Small Businesses (FSB)
suggests half (52%) of small firms have
been stung by unfair contract terms with
suppliers, costing nearly £4 billion in the
last three years.
Suppliers are failing to make autorollover clauses clear up front (24%), tying
businesses into lengthy notice periods
(22%), charging high early termination
fees (20%) and concealing details in small
print (20%).
Two in five (40%) respondents said they
felt powerless to do anything about unfair
contract terms because the supplier was
too important or powerful to challenge.
This highlights that small firms can be just
as vulnerable as consumers when buying
goods and services, and they need better
protections.
Mike Cherry, FSB National Chairman,
said: “Small firms on the bad end of a deal
are losing out to the tune of £1.3 billion
each year. We have identified persistent
problems with suppliers, across sectors,
treating small firms unfairly. This suggests
the market is failing to deliver value for
money products and services for small
business customers.
“Small businesses don’t have the time,
expertise or purchasing power to scour the
market to find and negotiate the best deals.
Small business owners behave in a similar
way to consumers, but they don’t have the
same guarantees of quality or legal redress
in an unfair situation.”
LOCKSMITHJOURNAL.CO.UK | SEP/OCT 2016
The FSB research, ‘, sheds light on the
scale of the problem, suggesting 2.8 million
small firms have suffered because of unfair
contract terms. Most (75%) of those affected
had been stung twice or more in the past
three years.
One in ten (11%) small businesses affected
by unfair terms were set back by more than
£5000 dealing with a single problem. Two in
five (37%) lost more than £1000 through an
unfair agreement with a supplier.
To drive change in this area, Government
and regulators of energy, financial services
and telecoms should more routinely
and explicitly focus on small business
vulnerabilities. Trading Standards should
also be given the power to take action
against suppliers imposing unfair terms.