Late Payments contract variation - allowed or not?

Helo, wonder if somebody can shed some light please:

"The Company shall be entitled to charge interest at the rate of 2% per annum above the base lending rate for the time being of Bank of England on any sums due but not paid from the date payment became due until the actual date of payment. The parties agree that this represents a substantial remedy in the context of the Late Payment of Commercial Debts (Interest) Act 1998."

I understand that an agreed contract may alter the percentage due but any variation has to be a sustantial remedy. Personally, I dont believe that reducing by three quarters DOES provide a substantial remedy.

The agency concerned are standing by this and refusing to negotiate. Can they arbitrarily ignore the legislation in this manner or are they wrong in doing so?

Kindest regards

Arianne