The publication of new retention data through Build UK’s Payment Performance Table marks a significant milestone in the long-running campaign to improve payment practices across construction. For the first time, reporting requirements now provide transparency around how retentions are being used and passed through supply chains, offering valuable insight into a practice that has impacted specialist contractors for decades.
Build UK’s latest data shows the real impact on cashflow through the supply chain. It identifies that tier one contractors withhold retentions at an average rate of 2% and, typically, pass on 74% of the retentions withheld by their clients. The transparency has been welcomed by Government and comes at a pivotal moment, with the Commercial Payments Bill progressing through Parliament and expected to receive Royal Assent in 2027. The Bill proposes a package of measures including:
- A ban on construction retentions
- Maximum payment periods of 60 days in the private sector
- Mandatory interest on late payments
- Enhanced powers for the Small Business Commissioner
- Expanded payment reporting requirements
For FIS, the direction of travel is positive. The principle of reform is now broadly accepted and supported across Parliament. The challenge is ensuring that the legislation delivers meaningful improvements in cashflow and business resilience rather than simply moving withholding practices into different parts of the payment process.
Introducing the FIS Commercial Draft Policy Briefing Note
As the Bill enters Report Stage FIS has prepared a detailed briefing note examining the Commercial Payments Bill and its implications for the finishes and interiors sector. The document sets out FIS’s current position, identifies areas where the Bill could be strengthened and highlights risks that could undermine its intended benefits. It aims to support both our own engagement with Government and any work members are doing directly with local MP or wider groups.
The key questions
While FIS supports the abolition of retentions, we are conscious that simply removing one mechanism does not guarantee better payment behaviour.
Our analysis focuses on several critical questions:
- How do we prevent retentions being replaced by delayed certification, extended verification periods or prolonged final account negotiations?
- What safeguards are required to stop alternative forms of withholding emerging?
- How can payment rights be enforced economically by SMEs?
- How do we ensure the Small Business Commissioner has sufficient powers and resources?
- What further reforms to the Construction Act may be needed to support the objectives of the Bill?
Why we need member input
As the Bill progresses, several important issues remain open for debate.
FIS is particularly concerned about:
- The Bill getting diluted with some organisations advocating potential exemptions for certain client groups.
- The risk of retention practices reappearing under different contractual arrangements.
- The affordability and accessibility of replacement security products such as bonds.
- The practical operation of payment deadlines within construction contracts.
- Creating affordable dispute resolution processes to.
This is where member experience becomes essential.
Have your say
The FIS briefing note is therefore being issued as a consultation document to members.
We are particularly keen to hear:
- Whether the FIS policy positions reflect your experience.
- Examples of payment practices that could be used to circumvent the proposed retention ban.
- Views on retention bonds, latent defects insurance and other alternative security mechanisms.
- Evidence of delayed certification, verification procedures or final account processes impacting cashflow.
- Suggestions for strengthening enforcement and transparency.
The aim is not to reopen the principle of reform but to ensure that the final framework delivers genuine improvement for specialist contractors and does not simply relocate financial pressure elsewhere in the payment cycle.
The next phase
FIS will continue to work closely with parliamentarians, the civil service, and industry partners as the Commercial Payments Bill progresses. We support the Bill’s objectives and believe it offers a once-in-a-generation opportunity to improve payment culture within construction. However, the legislation must be accompanied by practical reforms that make rights enforceable, prevent avoidance and ensure that money flows through the supply chain as intended.
We encourage all members to review the briefing note and share their views. Your feedback will help shape FIS’s engagement during the remaining stages of the Bill and ensure the voice of specialist contractors is heard as these important reforms move towards implementation.