The FCSA, in reply to those who say we don’t wish to derail the umbrella company gravy train

As most of the contractor industry is aware, a government consultation is underway on Tackling non-compliance in the umbrella company market.

But I’m also aware that a few people are wondering if our organisation will contribute positively to the consultation -- or merely take the stance that existing powers should be used against non-compliant behaviour, writes Chris Bryce, CEO of the Freelancer & Contractor Services Association.

I’ve even had to respond to one of those people on LinkedIn, as their characterisation of FCSA’s position – ‘that we aren’t interested in derailing the gravy train,’ wasn’t correct.  

For the record: FCSA's stance on the government umbrella consultation

The truth is we’ve been leading the call for regulation for some years now, and actively support the government’s intention to regulate the UK umbrella market. 

We believe it’s crucial that this important sector is protected from bad actors who actively exploit contractors by offering too-good-to-be-true schemes, which, when they fall apart, potentially expose affected contractors to horrendous consequences, and leave them being pursued by HMRC -- for a large tax bill and often large penalties too.

So as the FCSA, we will of course contribute to the consultation as part of our role of representing our members, who strive to achieve and promote best-practice in the industry.

What ‘good’ umbrella regulation looks like

Good, well-designed, regulation should have four key objectives in our view:

1. Recognise that compliant and ethical providers in the supply chain are beneficial services which ultimately protect workers (contractors).
2. Have a well-designed and well-thought-out ‘light touch’ approach which has regard to existing legislation such as
   • Tax and employment Law
   • Conduct of Employment Agencies and Employment Businesses Regulations
   • Agency Workers Regulations
   • Bribery Act
   • Criminal Finances Act
3. Create a greater focus on identifying rogue and unlawful operators and schemes.
4. Allow for the prosecution of the operators of those rogue companies, with deterrent fines for unremitted tax and NICs and, in clear cases of fraud or extortion, criminal prosecutions.

My organisation believes that good regulation will help everyone; end-clients, employment businesses, compliant umbrellas and, importantly for readers of ContractorUK, the contractors themselves.  

The FCSA isn’t a toothless tiger

It might reassure you to know, we have years of experience in this field. Our accreditation process is rigorous, stringent and strengthened by frequent spot-checks; the ability for contractors to check their payslips for any umbrella and/or use our new whistle-blower phone line to report any suspicions. Again, the whistle-blower phone line can be used to report any umbrella company (not just FCSA umbrella companies).

We’re also not toothless tigers. Our organisation has taken action against members who breach our charter and/or codes, up to and including expulsion from membership. And we communicate these actions to the wider industry -- recruitment agency partners, trade bodies such as the REC, APSCo, TEAM, and then we publish them on our website for all to see. 

Taking ‘non-compliant’ evidence seriously looks like this…

The FCSA also receives frequent reports of non-members offering dubious schemes to contractors, such as ‘mini-umbrella companies’ and various alternative payment methods -- the use of which could potentially harm contractors and so we pass that evidence to HMRC and/or the Department for Business and Trade.

In addition, we’ve actively investigated the criminal cloning of umbrella companies and passed comprehensive evidence of that to the authorities, including the police.

My final message to any doubters

We’ve done all this, and will continue to do this, because our aim is to lift the standards of the contractor industry as a whole, and weed out the cowboys who play fast-and-loose with the rules, as well the outright criminals who set out to commit tax fraud from day one.  

So be in no doubt. The FCSA welcomes any bringing forward by the government of well-thought-out regulation for umbrellas and to that end, we’ve called the government to rethink its shelving of the SEB, as we believe a Single Enforcement Body to regulate contractor umbrella companies must be pressed, so its establishment can happen sooner rather than later.