CPM054 CPW145 - Deductions and withholdings under formal disputes process

Wholesale Retail Code / Market Arrangements Code Change Proposal – Ref CPM054 & CPW145

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Published

3rd July, 2024

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The Wholesale-Retail Code (WRC), section 9.7.2, allows Trading Parties to withhold payments for disputed invoices. Currently, there is no formal process and/or timelines set out within the market codes for Trading Parties regarding the resolution of deductions and payment withholdings that are subject to queries or disputes. This means that payments can be withheld for indefinite periods of time. It is argued that the current informal bilateral handling approach can therefore create uncertainty and is at risk of being used inappropriately. This Change Proposal seeks to bring deductions and withholdings allowed by Section 9.7.2 of the WRC Business Terms within the formal Disputes Procedure. This proposal aims to establish a formal process and set out timescales so that these disputes can follow a structured process, ensuring increased transparency and certainty while at the same time promoting the use of the Dispute Procedure where necessary. While we support changes that can contribute to more effective and efficient market processes, we consider that the Final Recommendation Report ('FRR') fails to provide sufficient evidence on whether the proposed solution is the most appropriate and cost-effective solution to deliver the intended aim, particularly in relation to the short timelines within which a Retailer must raise a Dispute or face becoming a Defaulting Trading Party. At this stage, the information and evidence presented in the FRR for this Change Proposal leaves us unable to properly conclude that the proposed solution would effectively or proportionately achieve the desired outcomes.