To that end, I recently met senior management within each pub company to talk about the PCA’s work, how we can best communicate with their tenants and to understand how the current economic climate is affecting their businesses and those of their tied tenants.
But pubs code compliance doesn’t just come from the top. It should run through the business like Blackpool rock. Last week I had the pleasure to spend the day with a group of staff from Star Pubs & Bars, to see how they are achieving that. Since my investigation into Star, it has taken significant steps to reform its processes to achieve compliance with the Pubs Code, and I wanted to see that progress for myself.
Star’s compliance progress
In October 2020 I published the report on that investigation of Star, in which I found 12 breaches of the pubs code in relation to its use of stocking requirements in market rent only agreements. I made eight binding recommendations to Star aimed at improving processes and governance and overall compliance with the code. Star accepts it breached the pubs code in the manner set out in the investigation report and has paid a £1.25m penalty imposed in respect of its breaches.
Star has fully co-operated with the PCA in respect of my recommendations and implemented them for the benefit of all its tenants. It has in fact gone above and beyond those recommendations and come up with positive and innovative steps to improve on compliance. One of these is the creation of a staff Pubs Code Champions network. The idea is that Star employees anywhere in the business are trained and supported by the code compliance officer (CCO) and her compliance team to provide peer support to any colleague, who can approach them about a pubs code matter. Star has recognised that it is important for compliance that everyone who works for them feels confident about their regulatory duties and how to put them into practice in their dealings with tied tenants.
Every regulated pub company must appoint a CCO, whose role it is to verify compliance with the pubs code. That person will have contact with the business development manager (BDM) and others in the business, to discuss matters relating to pubs code duties. The CCO must also make themselves reasonably available to answer pubs code queries from tied tenants and their representatives. However, the CCO is only one person. Members of Star’s network of Pubs Code Champions are available to anyone in the business to ask questions about the pubs code to build knowledge. So, if there is a question about a deadline for taking a pubs code step, for example, there will be someone at hand who is able to answer it.
The tied tenant and their BDM
Members of the PCA team have also had the opportunity to understand more about the business lives of tied tenants and how that is supported by their BDM. Each member of PCA staff, including me, spends time with BDMs, visiting pubs on their patch, which gives us insights into how the relationship is working day to day. We know tenants are busy people and these visits provide a useful opportunity to talk to tied tenants about how the pubs code supports them in their businesses and to also talk to BDMs about their work. From this interaction we get valuable ideas about how pub companies can best communicate about pubs code rights more effectively. I am grateful to all the pub companies for arranging these visits and to the tenants who have taken the time to speak with us.
There is no doubt that overall pub company BDMs are fair in their discussions with tied tenants. The BDM under the code is not just the person who has that job title, but is also anyone who represents the pub company in negotiations with the tenant over rent, repairs and business planning. The pubs code requires that all discussions about these matters are written down and shared with the tenant.
In my recent 2023 tied tenant survey, of 1200 tied tenants who took part, 81% of them agreed that their BDM is fair in discussions with them, up five percentage points from last year. That represents a very high level of satisfaction. Every pub company scored at least 73%. In the case of Star, that percentage is 83%, up from 75% last year. I look forward to seeing improvements in other metrics collected in my survey next year which innovations like the Star Pubs Code Champions network can support.
This column is intended to aid industry understanding about the pubs code and its impact. Nothing in its should be understood as a substitute for the pubs code legal framework.
