SMEs need consumer-level protection

Small and micro businesses need the same level of protection as consumers when buying utilities, according to a report by the Federation of Small Businesses (FSB).

The FSB argues that many small businesses are disadvantaged when choosing energy or water providers as they lack the resources and negotiating power of larger firms.

The FSB is asking the Government to impose new rules on regulators, including:

  • regulators should treat micro businesses like domestic consumers except when there are clear reasons not to
  • the energy regulator should make utility suppliers publish default tariffs for small businesses
  • regulators should have the ability to protect businesses from mis-selling products or services.

John Allan, national chairman of the FSB, said:

"Small, and especially micro, firms don't have the same capacity to make buying decisions in the way large businesses do. They have much more in common with domestic consumers and we believe it makes sense for the level of consumer protection afforded to micro and small firms to reflect that."

Amelia Fletcher, professor of competition at the Economic and Social Research Council's Centre for Competition Policy, said:

"Existing consumer law assumes that firms are broadly able to look after their own interests when making purchases. This may be true of larger firms, but many smaller firms are relatively unsophisticated as purchasers, and no better able to protect themselves than individual consumers are."

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