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SPA responds to claims that umbrella company industry lacks regulation
Posted Feb 11, 2010
The SPA, which represents several leading umbrella companies, has responded to claims that there is a lack of regulation within the umbrella industry.
Umbrella companies in financial difficulty
Following news that several umbrella companies had recently left contractor employees unpaid due to financial problems, recruitment law specialists Lawspeed spoke of their concerns for the umbrella industry as a whole:
"The umbrella industry is not regulated and there are few checks and balances in place. All umbrellas claim to comply yet the issue of incorrect payment of expenses in particular is a current focus of concern for HMRC..."
SPA responds to umbrella regulation claims
Today, The Service Providers' Association (SPA), which represents companies in the umbrella sector responded to these claims.
The SPA launched its own code of conduct in November 2009. As part of the code of conduct process SPA members undergo an independent review from one of the 'big four' accountancy practices, with the review documentation being voluntarily submitted to HMRC - an act of open-book accounting and independent assessment that aims to demonstrate their commitment to principled and transparent business practices.
The organisation points out that "the rigorous code was designed to address a number of regulatory issues, including those relating specifically to HMRC payments. There is a strict compliance procedure in place, which has already caused members to leave the association in light of their inability to comply."
SPA Chairman, Stuart Davis said:
"While SPA is saddened by the problems facing some businesses operating in the sector it is wrong to claim there is a complete lack of checks and balances in place. Accepting the need for greater regulation SPA worked with a wide variety of industry stakeholders along with HMRC to devise an independently audited regulatory framework - encouraging best practice and transparency across the sector. The code is a perfect example of how effective self-regulation can work in practice and allows people to have full confidence when using our members' services.
"Our industry is no more immune to the economic downturn and the problems it creates than any other, but the strict standards and legal guidelines included in our code of conduct provides reputable service providers with the opportunity to demonstrate their commitment to professional, ethical operating practices. We look forward to continue working with all relevant parties to ensure the right procedures are in place."
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