The Bribery Act: should I wait?
Sian Herbert, a partner in PwC's forensic services practice says delays to the implementation of the UK's Bribery Act is a "double-edged" sword for financial institutions.
There has been significant noise regarding the Bribery Act and concerns about its potential impact on business. As a result, the Government has initiated a review of the Act and additional clarification and guidance is expected. What form and content this guidance will take, its timing and whether any provisions of the Act will be revised are as yet uncertain.
The Ministry of Justice (MoJ) has reaffirmed that there will be a three month window between the issue of the revised guidance and the implementation of the Act, but timings remain unclear. As a result, many organisations, including financial services institutions, are wondering whether to proceed with implementation or wait for the additional guidance.
For financial institutions, this delay is a double-edged sword. On the one hand, additional time to develop, implement and embed strong anti-bribery programmes and controls is to be welcomed, especially by those whose own programmes are not particularly well developed. But, there is still prevailing uncertainty about what exactly constitutes best practice and concern that if some of the key provisions of the Act are changed or amended there could be a very significant impact on the existing programmes and policies. Many financial services organisations are also concerned that the impetus and internal profile they have raised with senior stakeholders regarding the Act will be lost due to publicity and levels of uncertainty.
Those organisations that have not yet commenced a programme may be tempted to wait for the additional guidance and confirmation that the act will be adopted before committing time, money and resources to developing new policies and procedures.
The prevention of bribery should not – and, indeed cannot – be a box-ticking exercise. Institutions expecting the further guidance to constitute a ready-made checklist that will guarantee a bribery-free organisation are likely to be disappointed.
There is no ‘one-size-fits-all’ solution, and every institution should already be involved in analysing its own specific risks and considering whether appropriate controls are in place to mitigate those risks. This is especially true in the regulated financial services sector. The Financial Services Authority (FSA), in its Thematic Review of Insurance Brokers, indicated that bribery is already a financial crime risk and should be considered as part of senior management arrangements, systems and controls (SYSC) and Principles for Business (PRIN). All financial services companies need to factor bribery into their risk-assessment process.
While there may be changes to the Act, and the additional guidance may be helpful, the bottom line is that organisations need to develop procedures that adequately address their identified bribery risks. Although greater clarity might emerge, this fundamental issue will remain the same.
So, how should financial institutions respond to the delay? Our advice is that financial services companies should continue to develop and implement a robust and defensible anti-bribery programme. Companies might wish to wait for the additional guidance before issuing final policies and procedures, but the preparatory work can and should be undertaken now.
It takes time to embed change and encourage the right values and behaviours. For a large global organisation, three months is not a significant period to achieve this. The delay in the implementation of the Bribery Act should not therefore delay companies’ response to bribery risks.
Image provided by Scott Chan.
Date Posted:9th February 2011