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Cost of 'unfair' contract terms revealed by FSB

22 August 2016

Research conducted by the Federation of Small Businesses (FSB) shows that 52% of small companies have been affected by unfair contract terms.

FSB says this also shows that the issue has cost them nearly £4bn over the last three years.

Further analysis shows that 40% of respondents feel powerless to challenge unfair contracts due to the supplier being too important or powerful.

The FSB said this shows that small businesses can be as vulnerable as consumers purchasing goods and services, further stating that SMEs need better protection.

Around 2.8m small firms have been adversely affected by unfair contract terms, said the FSB within its Treating Smaller Businesses Like Consumers - Unfair Contract Terms.

Issues highlighted by the survey show that suppliers are failing to make auto-roller clauses clear up front, according to 24% of respondents.

A further 22% said they were tied into lengthy notice periods, with another 20% saying they were charged high early termination fees.

Another 20% of respondents said they had been affected by details concealed in the small print of contracts.

FSB national chairman Mike Cherry said: "Small firms on the bad end of a deal are losing out to the tun of £1.3bn each year.

"We have identified persistent problems with suppliers, across sectors, treating small firms unfairly.

"This suggests the market is failing to deliver value for money products and services for small business customers."

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