Policy or Law? Unpacking the Preferred Supplier List

Introduction: When Policy Puts on a Wig and Calls Itself Law

There is nothing unlawful about a recruitment business operating a Preferred Supplier List (PSL). Agencies are entitled to manage risk, impose due-diligence standards, and decide with whom they are prepared to trade.

What is problematic is something subtler: presenting internal commercial policy as if it were a legal mandate, and repeating that claim so consistently that contractors stop questioning it.

In late 2025, New Red Planet Ltd issued a suite of contractor guidance, migration documents, enforcement policies, and staff training materials governing umbrella company usage. Across those materials, one message is hammered home:

You don’t have a choice — and the law says so.

This article combines a deliberately cynical reading of that narrative with a legally grounded analysis of whether those representations are accurate, and whether they cross the line into a misleading commercial practice under the Consumer Protection from Unfair Trading Regulations 2008 (CPRs).

The focus is not on motive, but on accuracy. And accuracy matters.

1. The Curious Disappearance of Choice

In document after document, contractor choice quietly evaporates.

Not through argument. Not through explanation. But through assertion.

Contractors are told they “must” move to a PSL umbrella. That non-PSL umbrellas are “not permitted”. That this is “required by legislation”. That the rules are “not a commercial decision”.

What is never said — anywhere — is the honest alternative:

“This is our policy choice, based on our assessment of risk.”

Instead, policy is presented as inevitability. Choice is not rebutted; it is simply erased.

2. What Contractors Are Explicitly Told

Across New Red Planet’s own materials, PSL usage is framed as a legal obligation rather than a discretionary policy.

Examples include:

“The law requires us to work only with compliant PSL umbrella companies. Continuing with a non-PSL umbrella is not permitted.”

“These rules are based solely on legislation, HMRC requirements and worker protection.”

-Off-PSL Enforcement Policy Introduces a “Zero-Engagement Rule” and “Mandatory PSL Onboarding” applying to all contractors.

-Internal staff training materials Instruct consultants to tell contractors:

“You will need to select a provider from our Preferred Supplier List.”

The cumulative message is unambiguous:

• PSL use is mandatory

• Contractor choice does not exist

• The requirement is driven by law, not policy

3. The Magical Phrase: “The Law Requires Us”

If a single sentence does the most work across these documents, it is this one:

“The law requires us to work only with compliant PSL umbrella companies.”

It appears in contractor-facing FAQs, migration guides, and internal scripts.

It has one fundamental problem.

It is not true.

There is no UK statute that requires:

• a contractor to use a particular umbrella company, or

• engagement solely through a recruitment business’s PSL.

What does exist is increased agency liability and heightened due-diligence expectations. New Red Planet has quietly converted risk exposure into worker obligation.

That conversion is rhetorical — not legal.

4. The Legal Reality: Risk Is Not Law

Even allowing for forthcoming PAYE-liability reforms, the legal position remains clear:

• increased liability does not remove worker choice

• due-diligence obligations do not mandate PSL exclusivity

• risk transfer does not override statutory protections

Most critically, the Conduct of Employment Agencies and Employment Businesses Regulations 2003 prohibit agencies from:

• requiring a work-seeker to use a particular intermediary

• presenting restricted choice as compulsory

Agencies may operate PSLs. They may even refuse certain commercial arrangements.

What they must not do is misrepresent those decisions as legal requirements.

5. April 2026: The Scarecrow Reform

Much of New Red Planet’s justification rests on the looming spectre of April 2026:

• liability will increase

• HMRC will pursue agencies

• umbrellas will be regulated

All of this may be broadly accurate.

But notice what is missing.

No reform states that:

• contractors lose the right to choose intermediaries

• agencies may compel use of nominated suppliers

• PSL exclusivity becomes mandatory

The reforms are real. The conclusion drawn from them is… imaginative.

Risk has been inflated into rule.

6. “Not a Commercial Decision” (Except Where It Obviously Is)

One of the most revealing statements in the guidance is the assertion:

“Is this a commercial decision? No.”

This is difficult to reconcile with the surrounding reality:

• finance teams assess margin impact

• off-PSL approvals are “not guaranteed”

• PSLs are “limited to trusted providers”

• non-compliance can delay start dates

These are not features of legislation.

They are features of procurement.

Calling this “not a commercial decision” is like calling a locked door an architectural inevitability.

7. Scripted Reality and Managed Consent

Internal training materials do not focus on explaining the law. They focus on explaining what to say.

The message delivered to contractors is carefully calibrated:

• firm, but supportive

• reassuring, but final

• compliance-sounding, but non-negotiable

This is not education.

It is managed consent — using the language of law to neutralise resistance before it can form.

8. Why This Meets the Definition of a Misleading Commercial Practice

Under Regulation 5 of the CPRs, a commercial practice is misleading if it:

• contains false information, or

• deceives the average consumer about their legal rights, or

• causes a transactional decision that would not otherwise be taken

a) False representation of legal obligation

Statements such as:

“The law requires us…” “These rules are based solely on legislation…”

are objectively inaccurate. The obligation arises from policy, not statute.

b) Deception as to legal rights

Contractors are led to believe:

• refusal is unlawful

• non-PSL use is illegal

• compliance is mandatory as a matter of law

This directly misrepresents their legal position.

c) Transactional effect

The documents are plainly designed to:

• compel umbrella switches

• deter resistance by invoking “the law”

• suppress scrutiny or challenge

That is a textbook example of influencing a transactional decision through misleading information.

Under the CPRs, intent is irrelevant. Accuracy is what matters.

9. The End Result: Compliance Theatre

The cumulative effect is predictable:

• contractors feel they have no option

• challenges are neutralised before they begin

• responsibility is deflected upward to “the law”

This is compliance theatre — authority borrowed rather than earned.

And like all good theatre, it only works if the audience doesn’t look behind the curtain.

Conclusion: Call It What It Is

New Red Planet is entitled to:

• manage risk

• operate a PSL

• refuse commercial arrangements it dislikes

What it is not entitled to do is:

• tell contractors the law leaves them no choice

• recast internal policy as statutory compulsion

• use legal language to shut down lawful dissent

If the policy is defensible, it should be defended honestly.

And if it requires telling contractors “you must, because the law says so” — when the law does not — then this was never really about compliance at all.

This article critiques representations, not motives. Under UK consumer law, accuracy matters more than intent.