Contractor compliance stakes have been raised, as the founder members of the Freelancer and Contractor Services Association (FCSA) – Brookson, Giant and Parasol – have all passed the demanding Code of Conduct review process conducted independently by a ‘big four’ accountancy practice.
In this exclusive interview with ContractorCalculator, FCSA Chairman Stuart Davis heralds the achievement as a significant step forward for contracting sector compliance, providing contractors, and their agencies, with a new standard of compliant service provision.
“Contractors will benefit from the knowledge that, if they choose an FCSA service provider, that supplier meets the stringent requirements of the FCSA Code of Conduct,” explains Davis. “And that Code has been developed with contractor’s interests at its heart, plus with significant input from HMRC, the Recruitment and Employment Confederation (REC) and the Association of Professional Staffing Companies (APSCo).”
Contractor benefits of compliant suppliers
According to Davis, contractors choosing a service provider that has passed the review process can be sure that supplier meets minimum standards across a range of organisational features and capabilities. These include compliance, financial stability, internal processes and quality of service provision.
“The FCSA Code of Conduct requires that service providers pass through an independently managed process before membership is granted,” says Davis. “It has been particularly important that the founder members, having spent two years developing the code, with regular input from HMRC, REC and APSCo, have undergone and passed the review process themselves.”
Umbrella and limited company contractors choosing an FCSA member can expect to experience appropriate sign-up and starting procedures, fit-for-purpose contracts, compliance with HMRC requirements, and confirmation of financial stability. This includes discharging liabilities to HMRC, compliant expenses policies and, for limited company contractors, expertise in IR35 and the MSC legislation.
Delivering the right contracting solution from the outset
“Contractors entering the sector are presented with immediate choices, such as which trading option to choose continues Davis. “It is important that they have the right advice to make the best personal and business choices from the outset.”
Davis highlights that FCSA member firms’ ‘take-on’ procedures include just such advice for potential customers. This is a key component of the review process and ensures that contractors only join the service provider that is right for their individual services, and are not led into an inappropriate trading solution for their circumstances.
“There has been a lack of good, clear understanding about what contractors should expect from a high quality service provider,” he says. “FCSA members, and indeed the FCSA itself, have filled that gap with oversight and support from third parties.”
Agency sector endorsement
As a key partner in the contracting sector supply chain, the agency sector not only participated in the creation of the Code of Conduct over its two-year gestation, but has also responded positively to the three founder members passing the audit. FCSA has even garnered support from APSCo and REC, which Davis says is a first for the contracting industry.
According to REC Chief Executive Kevin Green, third-party oversight and HMRC input are vital: “This process has two important factors: one is independent review, which ensures objectivity; and the other is HMRC involvement. We are pleased that the FCSA are bringing standards and professional conduct into a part of our industry sector.”
The Code’s requirements on the financial stability of service providers are designed to give reassurance to agency partners and contractors alike. APSCo’s Ann Swain explains: “I am particularly pleased to note the code’s unique clarification of FCSA members’ financial standing and their positive net worth.”
Plus, adds Davis, agencies offering preferred supplier lists that include contractor service providers can choose FCSA members knowing that their umbrella and limited company services will be of a high standard and that the supplier is a financially stable element of the supply chain.
FCSA’s demanding requirements
“FCSA is not a tick-box organisation, nor do its members have the authority to grant or deny membership,” explains Davis. “Any service provider can apply and whether they fulfil membership requirements by passing the Code of Conduct is determined by the ‘big four’ accountancy practice that conducts the review.”
There are currently up to ten service providers actively applying for FCSA membership to undergo the full review , a process that involves:
- A challenging questionnaire that must be backed by supporting documentation
- An on-site audit to randomly test the answers on the questionnaire
- A further audit, covering areas such as the quality of the directors, the company finances, pre-employment checks, employment contracts and processes, as well as expenses processing
- HMRC receiving all audit documentation.
Davis says that the process can take as long as six months to complete, with prospective members potentially having to enhance their capabilities to meet the Code’s requirements.
The FCSA Code of Conduct says what we do.The fact that founding members Brookson, Giant and Parasol have all passed proves we do what we say!
Stuart Davis, FCSA
“The FCSA Code of Conduct says what we do,” says Davis. “The fact that founding members Brookson, Giant and Parasol have all passed proves we do what we say!”
The last word goes to APSCo’s Swain: “The FCSA code goes beyond anything else that is available in the market and will be the clear leader in setting compliance standards going forward.”
Published: Wednesday, July 14, 2010
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