If you’re a contractor working through an agency, chances are you’ve come across Preferred Supplier Lists (PSLs) in the past. In simple terms, a PSL is a pre-approved list of umbrella companies that an agency will work with. So, what exactly does it mean for you and your chosen umbrella company?

PSLs can be confusing. Sometimes they are strict, yet other times they can be merely guidelines. Searching for answers doesn’t seem to help clarify the situation either. If you look up PSLs online, you’ll find that most of the information on them is there to help agencies and not contractors. Fortunately, Umbrella Broker is here to buck the trend. Read on as we take a closer look at PSLs, why they exist and how they could affect you.

A brief introduction to PSLs

A PSL – also known as an ASL (approved supplier list) – is something you’ll find at the majority of agencies nowadays. They’re an agencies way of controlling who their contractors use as an umbrella company.

Some agencies use simply them as the name suggests – as a way to recommend their preferred umbrella suppliers to their contractors. Yet others are stricter and refuse to work with umbrella companies that aren’t on their PSL. Why? The reasons are mainly two-fold…


Agencies will openly admit that they use PSLs to maintain compliance. Essentially, they want umbrella companies to be legally compliant, meeting all the same regulations as they do themselves. So, they make an ASL or PSL comprising of all the compliant umbrella companies they have either audited or belong to a trusted umbrella organisations such as the FCSA.

They will complete regular audits of companies on their PSL to ensure they are always following the correct rules. That way, they can let contractors bill through these umbrella companies safe in the knowledge that there will be no future kick back to them should that contractor have chosen to be liberal with their tax payments

Financial incentives

Another reason, which some agencies are less open about, is the financial incentives given to agencies by the umbrella companies that are on their PSLs.

Having a list of companies which you prefer or insist on contractors using will naturally provide more business for those companies. This limits the companies that contractors can use, or at least points them in a certain direction, helping those on the PSL sell more.

In return for sending contractors their way, the favour is returned by the umbrella company in the form of commission payments, although these aren’t always strictly legal.

The benefits of PSLs for contractors

We’ve firmly established that PSLs are advantageous to agencies. But on top of that, they can also help contractors in a number of ways:

1.    Trust

Most agencies’ PSLs will only include companies with certain accreditations, such as:

These organisations require certain standards from their members. Companies have to be compliant to gain accreditation. With that in mind, a good PSL provides you with a list of umbrella companies you can trust.

2.    Specialists

While some umbrella companies provide services across sectors, others specialise in specific industries. If you’re looking for the latter, a PSL could help. Agencies might only include umbrella companies that operate in and understand your sector.

This will make things easier going forward, as they can assist with any industry-specific issues or regulations that come up.

3.    Services

Agencies will know what services and additional extras their clients require, from fundamental payroll and benefits to different kinds of insurance. Through a PSL, you could find that all companies provide these services – rather than having to search and filter through many that don’t.

4.    Convenience

Let’s face it, comparing umbrella companies can be stressful if you go it alone. Where do you start, with so many different providers, varying service levels and prices?

A PSL gives you a list of recommended umbrella companies to choose from to narrow things down. Be wary, however, as they may just be companies who have agreed to pay the agency for this privilege.

To make their services more attractive, PSL umbrella companies may even offer a discount to contractors operating through certain agencies.

How to navigate a PSL

A PSL could have several of the benefits listed above. However, it could have none. It’s important to ask agencies about their PSL or ASL so you know exactly where you stand. Find out whether they are accredited, industry specialists and what services they offer.

Make sure you’re clear on whether the list is preferred or obligatory. If it’s just a recommended list of umbrella companies, there’s nothing stopping you looking elsewhere for a better deal and more comprehensive service.

It’s also worth noting that agencies can’t legally take money for pushing contractors towards using a particular umbrella company. So, if you suspect this is happening, remember there’s no obligation to use those umbrella companies.

Alternatives to a PSL

Despite all the potential benefits of a PSL to contractors, it’s quite rare that they are fine-tuned and filtered in the contractors interests. Instead, they focus on the benefits to agencies, with compliance top of the list. While compliance also matters to contractors, you ideally want an umbrella company that ticks all the boxes and gives you the greatest financial benefit.

Fortunately, there is a way to understand how each umbrella company benefits you financially. Using a reliable umbrella company comparison site, you can compare providers based on what’s important to you. Whether it’s the price, reviews and ratings, or additional benefits, you can find the perfect company for you without any obligation.

How can we help?

At Umbrella Broker, we make it easy for contractors to find the perfect umbrella company for their needs. We have a wide collection of handpicked, well-reviewed providers, ready for you to compare online. Using our fast comparison tool, you can compare the very best umbrella companies based on your specific details.

See your take home pay, any taxes and the effect of any benefits. If you want to know more, simply click on the chosen provider for more information. Best of all, there’s no need to resubmit information if you want to see how a change in pay would impact your take-home pay or tax. It’s never been easier to choose the best umbrella company for you.