Besso Ltd, a Lloyd's broker, joins Aon, Willis and JLT Specialty in being fined by the FCA for anti-bribery systems and controls failings, as part of the FCA's continued targeted enforcement in this area.
Besso received a fine of £315,000 (after a 30% discount) for breaching Principle 3 by failing to take reasonable care to establish and maintain effective systems and controls for countering the risks of bribery and corruption associated with making payments to parties who entered into commission sharing agreements with Besso, or assisted Besso in winning and retaining business. The Final Notice can be found here.
While the FCA's focus was (as with previous fines) on overseas business, brokers need to be aware of any risks posed in respect of their domestic business as well, since in the Besso case the FCA's review of transactions was not limited to overseas business.
As with the previous cases, the key 'takeaways' from the FCA's approach are:
- 'Risk is enough' – Breach does not require any evidence of actual illicit payments or inducements being made to third parties. It is enough that the firm lacked effective systems and controls.
- 'Beyond paper compliance' - Anti-bribery policies and procedures must be tailored to the risks faced by the business and, equally importantly, implemented at an operational level. Mere paper compliance will by no means satisfy the FCA. The functioning of the policies on the ground must be checked periodically, for example through 'mystery shopper' exercises.
- 'Do your due diligence' - Thorough anti-bribery due diligence must be carried out on any third parties before they are engaged, and periodically thereafter. This includes producing brokers. Brokers need to understand who they are dealing with, why it is necessary to use that third party and what services the broker receives from the third party in return for payment.
- 'Write it down' - All anti-bribery measures, from carrying out risk assessments in order to design anti-bribery policies, carrying out due diligence on potential contractors and explaining the rationale for payments made to third parties, should be recorded in writing so that the firm is able to easily point to and provide to the FCA hard evidence of its attempts to ensure that it has effective anti-bribery systems and controls in place.
- 'Stay up-to-date' - Pay attention to FCA guidance, reviews, recommendations and final notices in this area.
Given the number of recent FCA fines in this area, we recommend that all brokers carefully review the effectiveness of their anti-bribery systems and controls.
Matthew Walker is head of insurance at Burges Salmon.