Tesco worst of big 4 UK grocers at following supplier code - watchdog

LONDON, June 22 (Reuters) - Tesco (Xetra: 852647 - news) has slipped to being the worst-rated of Britain's "big four" supermarkets at complying with an industry code of conduct designed to protect suppliers, according to a survey commissioned by the grocery watchdog.

Britain's Groceries Code Adjudicator (GCA) said a YouGov survey of 1,145 suppliers found that 4 percent of Tesco's suppliers felt the market leader never complied with the code, though that was an improvement on its 6 percent rating a year ago.

The study points to the challenge facing Tesco Chief Executive Dave Lewis, who is changing the firm's relationship with its suppliers in the wake of last year's 263 million pounds ($416 million) accounting scandal, which related to the booking of supplier payments.

In February the GCA opened a formal investigation into Tesco's relations with its suppliers, adding to inquiries by Britain's Serious Fraud Office and the Financial Reporting Council.

The survey found Tesco had replaced No. 4 player Morrisons as Britain's worst big-four performer after the latter improved from 8 percent a year ago to 2 percent for 2015.

No. 2 and No. 3 grocers Asda and Sainsbury's both recorded 1 percent levels.

Overall, smaller rival Iceland was rated the worst performer in the market, with 5 percent.

Some 30 percent of Tesco's suppliers said the firm rarely complied with the code, an improvement on 35 percent in 2014.

A spokeswoman for Tesco said the firm had undertaken a lot of work to improve its dealings with its over 3,000 UK suppliers. "The survey is just a snap shot. The survey does however show that suppliers have seen higher levels of improvement in our practice in the last year, compared with other retailers," she said.

Tesco is due to publish a first-quarter trading statement on Friday. Analysts are forecasting that a tentative recovery in its key home market has stalled.

($1 = 0.6316 pounds) (Reporting by James Davey; Editing by Pravin Char)