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Published 17 diciembre 2018

Update on Retention Reform


£10 billion tied up in retentions.  £700m lost by SMEs in the last three years in retentions.  The Carillion Collapse.  Sadly we are regularly seeing the failure of main contractors across the industry which invariably mean that their subcontractors will lose their retentions on all the jobs where they were working with that contractor.  If the retention is not protected in a trust fund it will be lost in the insolvency pot with either pennies in the pound being paid out years later or more likely simply no return.

The Aldous Bill

The Construction (Retention Deposit Schemes) Bill is supported across the industry and is believed to be supported by a majority of MPs but the Second Reading has been delayed to 25 January 2019 by – yes, you guessed it – Brexit!  It is proposed to add clauses to the Construction Act 1996.

The Regime

Retentions in all “construction contracts” are to be deposited with a third party and the payer has to notify the payee and the retention holder of the other’s identity in a central scheme, failing which the payment clause in the construction contract will have no effect and any retention withheld will have to be paid in seven days.  This will keep the retention monies out of the hands of the liquidator.

Will it become law?

There certainly seems to be the appetite for it.

Will it work?

Rather like the current payment regime and adjudications --only time will tell but it would protect the SMEs from yet again losing their retention due to the collapse of another main contractor.



Mark Roach

Mark Roach

London - Walbrook

+44 (0)20 7894 6314