The digital age has brought about significant changes and challenges for commercial agents and principals in the UK, but it has also presented new opportunities for growth and innovation.

Below we consider some of those challenges and opportunities and how they may impact an agent's obligations and entitlements under the Commercial Agents (Council Directive) Regulations 1993 (the Regulations).

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Challenges of the digital age

  • Increased competition: The digital age has made it far easier for new competitors to enter the market, which can lead to increased competition and price pressure for existing principals. Principals must work harder to retain their market position, and incentivising their commercial agents to retain and develop goodwill with existing customers is paramount. Failure to do so is likely to result in higher rates of customer migration, resulting in lower sales and, ultimately, lower commission levels for commercial agents. This would then be reflected in an agent's compensation or indemnity entitlement pursuant to Regulation 17 upon the termination of the agency.  
  • The need for digital skills: Commercial agents and principals must possess the skills necessary to operate in the digital age. These skills include social media management, digital marketing, and data analysis. This can often be a struggle for agents who have previously worked in a more manual fashion. Electronic reporting using reporting software is often an area where agents fall foul, preferring instead to continue to operate in the way they have done for many years. 
  • Allegations of breach: Failing to comply with a principal's new electronic reporting requirements can result in allegations of breach, such as a breach of Regulation 3, which places a duty on an agent to comply with reasonable instructions given by their principal. It is, therefore, critical that agents develop the necessary skills to correctly utilise digital reporting software.
  • Privacy and data protection: With the increased use of digital technologies comes the need to protect personal data and comply with data protection regulations such as GDPR. Principals and agents should be alert to the obligations imposed on them under the GDPR as data controllers so that they can avoid any unintentional data breaches.

Challenges of the digital age

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Opportunities of the digital age

The flip side of the digital age is the opportunities it presents, and if used well, technology can have a massive impact on business growth.

  • Improved efficiency: The digital age has enabled commercial agents and principals to improve their efficiency and reduce costs through the use of digital tools such as CRM software, automation, and online communication. 
  • New markets: The digital age has opened up new markets for commercial agents and principals, allowing them to expand their reach and tap into new customer bases within the UK and further afield. Agents can take advantage of this opportunity to build their customer base, which will be reflected in any termination award should the agency end.
  • Innovation: The digital age has created opportunities for commercial agents and principals to innovate and develop new products and services that meet consumers' changing needs and preferences. 
  • Online accounts: Technology has paved the way for online accounts, with many companies turning to online sales as their main sales method since the pandemic. Online accounts for many agents have become their most profitable accounts and are often a source of contention for principals- agents frequently earn very high commission levels on such accounts for what is perceived to be little effort.

Opportunities of the digital age

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In summary, the digital age presents both challenges and opportunities for commercial agents and principals in the UK.

To succeed in the digital age, commercial agents and principals must adapt to new technologies and ensure they possess digital skills, comply with data protection regulations, and innovate to meet the industry's changing needs.

The digital age also has its pitfalls and can result in an inadvertent breach of an agent's obligations pursuant to the agency agreement and the Commercial Agents Regulations if care is not taken.

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Our team of dispute resolution experts are ready to assist on all aspects of commercial agency law. We are always happy to have an initial no-obligation chat to help guide you in the right direction.

Please do not hesitate to contact us on: 

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