FCSA reveals ‘purpose and scope’ of its new independent arbitration panel

The FCSA has disclosed the terms of reference for its new Independent Arbitration Panel (IAP).

Following calls on social media for the panel’s terms to be disclosed, Chris Bryce, CEO of the Freelancer & Contractor Services Association, handed them over on Wednesday to ContractorUK.

[Editor's Note: The terms have since been uploaded to the association's website here].

Created on July 9th, the provided file is five pages and four chapters’ long, with the most relevant section for those calling to see the terms entitled, “Purpose and Scope.”

'Rejected'

It is divided into three parts. Part one alludes to what Mr Bryce said at the IAP’s formation in August – that the panel will “be the final arbiter” of where an “application for FCSA membership is rejected.”

But the terms reveal three areas where the four-person panel is excluded from assisting applications rejected from joining the association.

Specifically, the quartet cannot intervene if the rejection relates to the applicant failing a “fit and proper person” test; failing the FCSA codes, or failing three types of pre-qualification test.

'Liquidity'

That pre-qualification test may relate to the applicant company’s “liquidity;” their “persons of significant control” or their “size”.

So if a would-be member of the association is rejected by the FCSA at pre-qualification stage, on those three grounds but potentially others (“including”), the panel does not have a say.

Similarly, the terms state that the panel cannot intervene to relook at a turned away application on the sole grounds that the would-be member doesn’t like being turned away.

'A long way from fixing some of the issues'

“For the avoidance of doubt,” states 1b) of Purpose and Scope, “simple dissatisfaction with a rejection of an applicant for membership is not sufficient grounds for an appeal to the IAP.

But ‘simple dissatisfaction’ is a polite term to describe how some advisers to contractors reacted when the IAP was formed by the association, but its terms kept under wraps.

“A statement to the press about appointing some people whose names we are aware of, is a long way from fixing some of the issues that have emerged over the past few months,” Graham Webber of WTT Consulting posted last week.

'Surprised'

Following up, Tom Wallace also of WTT -- which like the FCSA assesses umbrella companies for compliance, echoed: “I'm surprised [the terms] were not published at the time the announcement was made.

“They must have existed, and all parties must have agreed to them -- including FCSA members.

"Otherwise why would the panel members agree to participate not knowing their remit?"

'Rather thin on the ground'

Speaking to ContractorUK, chartered accountant James Poyser confirmed that the details of the FCSA’s arbitration panel have – until now -- been  “rather thin on the ground”.

“Will this new panel be asked to assess if members have acted unfairly/unethically, or simply broken the FCSA rules?” asks Mr Poyser, chief executive at inniAccounts.

“In the most contentious cases, these are diametrically opposed -- actions may be deeply unfair on contractors, but no laws or rules [may] have been broken.”

'Perceived error... perceived misapplication'

Part two of the IAP’s ‘Purpose and Scope’ confirms that the panel is able to adjudicate on “disputed outcomes of a complaint by a worker against an FCSA Member.”

But it seems that here, the panel will be confined to two areas.

Its terms state: “Where a worker engaged by an FCSA member has made a formal complaint and this complaint has not been upheld by the standard complaint review process they may appeal to the IAP solely on the grounds of i) A perceived error of procedure or ii). a perceived misapplication or misinterpretation of FCSA’s charter, constitution, or codes.”

'FCSA arbitration panel could be quickly rendered irrelevant'

Mr Poyser reflected: “Following reports of FCSA members threatening legal action against the body itself, this new panel could be quickly rendered irrelevant -- by larger [FCSA] brollies’ legal teams who will simply press home that no rules have been broken.”

Part three of the IAP’s Purpose and Scope” states that the same two conditions – “ a perceived error “ and/or “a perceived misapplication” will apply to  FCSA member firms  who want to contest “sanctions” issued by the FCSA board.

Further similarly to part two, members cannot get the panel to review the appropriateness of a sanction due to being simply dissatisfied with the sanction.

'Appointment and Term'

And in terms of the type of sanctions, they “can” include a financial penalty for breach of FCSA’s charter, constitution or codes; membership suspension; membership termination.

Finally, in a very brief paragraph in what could actually be a very detailed section about the panel, given it is all-encompassing title "Appointment and Term of Office," the FCSA only says:

“Appointment will be made by the Board of FCSA on the recommendation of the Chief Executive. With the exception of FCSA’s Chief Executive, the appointment of an individual to the IAP will be limited to two terms of three years.”

Speaking before Mr Bryce disclosed the FCSA’s independent arbitration panel’s “Purpose and scope” document, contractor holiday pay lobbyist Contractor Voice said: “The [umbrella company] sector is in the dark as to the powers of the IAP, and what might cross their desk.”