Adherence to the Code of Conduct (the Code) is voluntary. It was negotiated by representatives of OGC with a selection of key participants in the PFI contracting market and with the involvement of the Treasury. The Code was introduced retrospectively to transactions signed before the introduction of the mandatory refinancing provisions contained within SOPC2 and to date has been widely and possibly universally accepted.
The Code applies to all refinancings implemented after 30 September 2002, on transactions signed up to 30 September 2002. In the Code the private sector undertakes to:
■ consult authorities on proposed refinancings, and to undertake all refinancings on an open and transparent basis; and
■ share the refinancing gain 70 per cent/30 per cent or follow existing gain sharing arrangements in the contract; however if the Authority accepts higher termination liabilities it should receive 30 per cent of the gain.
The Code supports mutually beneficial refinancings but an Authority is not obliged to accept increased termination liabilities as part of a refinancing. Instead, the Code specifies that the Authority must consider value for money in optimising the value gain for both parties.