When the regulator knocks, will you be ready? - Nabarro

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7 Have you been investigated by a regulator (apart from routine visits) in the last 12 months 90% 80% 70% 60% 50% 40% 30% 86% 20% 10% 4% 10% Yes No Don’t know Only 4% of our respondents had been investigated by a regulator in the last 12 months and those investigations had been conducted by the European Commission, the Financial Services Authority or Ofcom. However, despite the fact that the majority of respondents have not yet had a personal experience of a formal investigation, they are increasingly exposed to risk of significant penalties. With regulators such as the FSA adopting a principlesbased approach to their policing of the industry, the penalties for noncompliance are growing. The Health and Safety Executive reports that the average penalty imposed by the courts following work-related fatalities has increased from £17,000 in 1999/2000 to £30,000 in the year 2004/05, as the enforcement activities of the regulator has become more robust.
When the regulator knocks, will you be ready Survey 2008 Conclusion Companies operating in the UK are subject to increasing regulation and must deal with an ever-growing number of regulatory bodies. Although recognising the significant increase in the power of watchdogs, the professionals that we surveyed were largely unaware of the number of bodies that oversee their activities, and as a result were unprepared for the range of potential scrutiny. Most of the companies surveyed have in place internal procedures to deal with regulatory crisis management, which suggests an awareness of the risks of getting things wrong. But ensuring compliance requires an understanding across the business of what has to be done to stay within the rules and our survey found that very few companies are training their staff on a regular basis in important areas. Over 60% of the respondents to our survey had never given their staff any training on pension regulations (60%), environmental obligations (69%), diversity rules (70%) or competition issues (68%). The consequences of mistakes in these areas are severe, and often the lapses come from employees below board level. A case in point is the investigation by the Office of Fair Trading and the US Department of Justice into British Airways. The airline has given its commercial director, Martin George, and head of communications, Iain Burns, a “leave of absence” during a probe into its ticket prices and fuel charges and the OFT has said it is targeting individuals, without identifying those concerned. The penalties for regulatory breaches are growing, with the Health and Safety Executive witnessing a doubling of the amounts fined to individuals involved in cases concerning fatalities in the workplace between 2000 and 2005. With the approval in July of the Corporate Manslaughter and Corporate Homicide Act by Parliament, companies will also now face prosecution for manslaughter where their gross negligence leads to the death of individuals. At employment tribunals, the maximum compensation awarded for a race discrimination case in 2006 was £984,000, compared to a previous high of £635,000 in 2004. For unfair dismissal, the highest fine in 2006 was £478,000, compared to just £75,000 in 2005. In the face of this growing regulatory risk, all businesses in the UK need a thorough understanding of the organisations they are governed by and need policies in place to deal with responsibility for compliance across the company. Given the variety of regulators, businesses need a unified approach to handling regulatory issues. It is unlikely that any one person within a business will be an expert in all the different regulations, but they will nonetheless need to be able to coordinate a response no matter which regulator comes knocking.
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When the regulator knocks, will you be ready? - Nabarro

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