24 May 2006 | Paul Snell

The Forum of Private Business (FPB) is lobbying for the return of a 2 per cent deduction Matalan has imposed on all payments to suppliers.

The homewares and clothing retailer announced last year that it would automatically deduct 2 per cent from all payments to its suppliers in the second half of the last financial year.

The FPB, which lobbies on behalf of small and medium-sized enterprises and has been investigating the matter since May, has received a letter from Matalan in which the retailer explains why it implemented the mandatory 2 per cent "contribution" from its suppliers.

In the letter from Matalan chief executive John King to FPB chief executive Nick Goulding, King said he imposed the discount because other shops have done so and trading conditions are difficult.

But the FPB said this was not suitable justification for such a move and told supplymanagement.com it plans to meet with King in June to try to get a refund for suppliers who currently have a "black hole" in their accounts.

Responding to the letter in a statement, Goulding said: "The fact that its competitors may act disreputably does not give it carte blanche to do the same. The economic position is no reason to hit suppliers with retrospective discounts that they have no control over and do not agree with."

Goulding added that he found King's invitation to suppliers to express their concerns directly to him as "laughable".

A FPB spokesman said suppliers fear they will lose business if they complain about the charge.

He said the meeting in June would give the FPB an opportunity to "put forward our point of view" and added: "We will not stop until the situation is solved. We want to take action for suppliers."

A spokesman for Matalan said it had no comment on the matter.

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