The Scottish Government is now consulting on retentions and appears to favour a statutory retentions deposit scheme (the link to the consultations is here). One option is supporting a statutory scheme to ring-fence the monies. The consultation closes on 25 March 2020.
Regarding the Aldous Bill, which has been calling for a retention in trust policy in England, this Bill lapsed prior to the autumn prorogation of Parliament, but a new and similar Bill is being championed in Parliament by Lord Mendelsohn.
In support of this work SEC Group has worked up a scheme that could be used to ring-fence cash retentions. SEC has been working as part of a consortium (involving a financial services company, a major insurer, a large tier 1 contractor and a software developer) and has now developed the structure for an IT platform that will support a retentions deposit scheme. This factsheet provides a simple explanation of how the scheme will operate. This will help to inform policy and future legislation.
The Construction Leadership Council is still favouring support for the Build UK Retentions Roadmap, which is anticipated to yield zero retentions by 2025.
Iain McIlwee CEO commented, “There is no place really for retentions in a modern industry, it is a blunt instrument that does little to manage quality and is more about penalising and adding risk to a fragmented supply chain and hence we support the zero retention policy of Build UK. It is clear that without an outright ban retentions will need to be phased out and a ring-fencing will at least introduce greater surety and transparency to the work – we are grateful to the SEC Group for sharing and welcome feedback from our own community on how we proceed.”Iain McIlwee, FIS Chief Executive
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For more advice from FIS on retentions, visit the FIS Contractual/Legal Knowledge Hub here