John Burbidge-King is CEO of Interchange Solutions, a consultancy operating exclusively in the field of bribery, corruption and fraud risk mitigation.
Earlier this year, the Financial Services Authority (FSA) in the UK warned that many banks were failing to provide proper controls to prevent bribery and corruption despite the introduction of the UK Bribery Act in July 2011.
The FSA said that almost half of the 15 banks it had visited for on-the-spot inspections had failed to undertake an adequate anti-bribery and corruption risk assessment.
Given the barrage of criticism that the banking and financial services sector has come in for in recent times, this apparently lackadaisical approach to avoiding bribery and corruption seems implausible, but facts are facts.
The Authority went on to warn that senior managers’ knowledge of corruption laws was so poor that it was “difficult for us to see how firms’ senior management could provide effective oversight”. Only two of the 15 firms visited had carried out an anti-corruption audit.
Prior to the publication of the FSA’s findings, in March of this year, Coutts received a fine of almost £9million from the FSA for breaches of money laundering rules. Coutts failings had “resulted in an unacceptable risk of Coutts handling the proceeds of crime”.
The FSA had paid a visit to Coutts in October 2010 as part of its review into how banks were managing situations in which there was a potentially high risk of money laundering. According to the FSA, the bank failed to check the source of funds when prospective new clients tried to open accounts.It also failed to check on any intelligence about its existing or prospective clients and had not kept information on those clients up to date.The FSA said there had been deficiencies affecting almost three quarters of high-risk customers’ files.
Coutts is but one example with the sector further tarnished by allegations of unethical behaviour by Barclays, HSBC, and Standard Chartered; all reputable regulated businesses as scandal after scandal taints the sector’s image.
Any perception of wrongdoing will affect confidence in the sector, but falling foul of legislation such as the UK Bribery Act and the US Foreign Corrupt Practices Act, are potentially extremely damaging, both for corporations and individuals.
- Offering, promising or giving a bribe
- Requesting, agreeing to receive or accepting a bribe
- Bribing a foreign public official
- Failure of a commercial organisation to prevent bribery.
- Proportionate procedures – clear, practical policies and procedures
- Top level commitment – top down culture where bribery is unacceptable
- Risk assessment – assessment of both external and internal risk
- Due diligence – really knowing with whom you are doing business
- Communication (including training) – embedding the messages
- Monitoring and review – auditing and financial controls
The penalties are harsh – up to 10 years imprisonment, unlimited fines and civil or criminal recovery from convicted individuals companies and potentially from shareholders. Company directors may be at personal risk too.
The Act applies to all commercial organisations registered in the UK as well as foreign companies operating in the UK. Regarding foreign companies, it will not matter that the bribery offence has not taken place in the UK and non-UK persons may also be prosecuted for offences that take place in the UK.
Bribery is global, although it is more prevalent in certain countries. Each year, Transparency International, the world’s leading non-governmental anti-corruption organisation, publishes its Corruption Perceptions Index (CPI).
In 2011, two thirds of countries covered by the CPI were given scores of less than 5, which means they are considered significantly corrupt.
- The Board should undertake or commission an external assessment of potential risks to the firm by cconductinga company-wide health check of anti-bribery compliance (ABC) risk.
- Ensuring that steps to mitigate bribery risk are documented on the board risk register
- Introduce a clearly articulated and communicated ABC culture, visibly driven from the top.Rresponsibilityrests with the Board; it is important for a firm to demonstrate that anti-bribery is part of its fabric and embedded in its culture
- Introduce anti-bribery staff training. Current staff should receive anti-bribery training,particularly those more exposed, and new staff should receive training as part of their induction. Training should be reviewed and updated regularly.
- Implement policies to address conduct (including sanctions), ethics, hospitality and gifts, facilitation payments, commissions, monitoring and ‘speak up’ mechanisms, political and other lobbying, and conflicts of interest.
- Demonstrate accountability and responsibility, from employees to the boardroom including non-executive directors.The Board should appoint an individual with overarching responsibility for overseeing ABC matters and ensuring that the anti-bribery policy is embedded in the business. The firm should also announce this appointment to employees and its external stakeholders.
- Introduce robust processes for the appointment, integrity due diligence and management of all third parties such as sales agents, advisers and other associated persons, external to the business. This should also apply to any outsourced operations, especially call centres and back office.
“But we are FSA or AN Other body regulated” is an insufficient excuse to put off the rainy day of properly addressing bribery risk, the associated reputation damage and cost in the event of an allegation.
Younger generations drive UK alternative payment method adoption for online transactions
- 42% of Millennials and 35% of Generation Z feel confident using alternative payment methods, or have used them previously
- 81% of consumers agree security of their data and money is the most important aspect when choosing a payment method
UK London, 11th August 2020 – As the migration away from traditional payment methods in the UK accelerates, younger generations are leading the adoption of alternative payment methods (APMs) such as bank transfers and e-wallets, reveals a new study from PPRO. According to the findings, 42% of Millennials (born between 1980-1993) and 35% of Generation Z (born between 1994-2001) feel confident using, or have used, these methods of payment before.
In the UK, any payment method other than credit or debit cards is viewed as an alternative payment method (APM). However, across the globe, these forms of payment are considered local payment methods (LPMs) due to their broad adoption. In fact, there are over 450 significant local payment methods currently available worldwide, which account for more than 70% of global e-commerce transactions.
Ongoing COVID-19 restrictions have seen a surge in e-commerce in recent months, with many consumers forced to shop online for everyday goods. As a result, UK consumers have been more inclined to try a range of digital payment methods to enable a convenient transaction experience. Currently, 89% of UK consumers are confident using PayPal, whilst a further 31% express the same confidence in using mobile wallets such as Apple Pay or Google Pay. This form of payment is particularly high for younger generations, with 68% of Generation Z stating they use mobile wallet technology.
For younger generations, seeing a buzz about new payment methods in the news and on social media has been a key driving force for local payment adoption, 31% of Generation Z consider this the biggest motivation to try new payment methods. For Millennials, 37% said that merchant acceptance is their main driver.
For the overall UK population, however, security was ranked the top adoption driver, even above reputable brand image, with over half (59%) of UK consumers stating security is the most important influence on their usage of new payment methods. This highlights the growing need for online merchants, Payment Service Providers and FinTechs to address consumer perceptions around trust and assure the security of payment methods at checkout.
“Local payment methods, such as direct bank transfers and pay later schemes, are considered new ways to pay in the UK. However, for online merchants that sell to consumers across borders, these local methods are the norm and must be offered at the check out to reach international consumers,” comments James Booth, VP Head of Partnerships, EMEA at PPRO.
“Traditionally, the UK and US alike have stuck to using credit and debit card payments for online transactions. However, for merchants, local payment methods (LPMs) are much more secure in comparison to card payments, due to chargebacks and being prone to digital theft and fraud. LPMs, such as bank transfers, are more secure and a lot cheaper for merchants to process,” adds Booth.
Teaching children about wealth management and why there has never been a better time
By Annabel Bosman is Managing Director and Head of Relationship Management at RBC Wealth Management
As we approach the end of week sixteen in lockdown, I am breathing a sigh of relief at having successfully navigated another week of juggling work and client commitments with the increasing demands of my children – age six and nine.
My day job is to lead RBC Wealth Management International’s relationship management efforts in the British Isles, but my toughest challenge right now is educating and entertaining my new junior co-workers each day.
While my children’s school has done a great job at setting up daily tasks and learning activities, there is only so much ‘teaching’ they can take from me without World War III breaking out. So instead of rigidly sticking to the school curriculum each day, I have taken the opportunity to educate my young children about a topic that is often not discussed enough in school — money.
What I do for a living has become a central discussion in our co-working space — also known as the dining table. I have found that investment concepts can be grasped quite well by young children and this has led to some interesting conversations about which businesses are doing well in the current situation, and those that are not. Children are often more logical than adults, and in my house, this logic is helping them grasp the basics of an investment philosophy. As a result, I have even passed conversations around stock markets off as maths classes!
For young children like my own, helping them learn the basics of managing money is something that will hopefully set them up well in life. There are some great tools to help them do this – we use GoHenry, which provides children with a pre-paid card to learn about budgeting. Likewise, encouraging conversations around how they spend virtual money whilst gaming on apps like Roblox can give some really important lessons around how you look after the money you have earned – and how if something seems to be too good to be true, it probably is.
The most important thing is not to underestimate your children. Whether it is the application of a “mummy-tax” when they want chocolate or applying interest rates (albeit nominal!) if they want to borrow money, teaching our children the basics around money is something we can all do.
Incorporating new lessons
The first step is to identify the best way to approach teaching these topics in a way they will understand. Resources such as the Usborne Money for Beginners are really helpful to start conversations. There are also several YouTube clips and even TikTok channels dedicated to helping children think about money. I tend to think about what is important to them and use that as a catalyst to start conversations; for example, it could be how they can monetise their love of the gaming app Roblox.
Ending the taboo
Any conversation that leads to a greater awareness around financial discipline and security has to be a positive, no matter what the age – and there are certainly parallels with my experience and that of my clients. There seems to have been a shift in HNW and UHNW families’ willingness to talk about money. Whereas previously it was seen as very un-British to speak about money, the pandemic has meant that a more open conversation is taking place.
Whatever our financial position, we often bury our heads in the sand when it comes to money, and don’t always have a clear financial plan, but when we start to put down on paper what’s going in and out, we immediately start to feel more in control, thus becoming more engaged. It can be uncomfortable to have that conversation with your family, but we regularly speak with our clients about all manner of sensitive subjects including putting wills in place, inheritance and protecting loved ones. Naturally, this is also bringing conversations to the fore around succession planning, legacy, philanthropy and even one’s own mortality. When times are good, it’s easy to not have these thoughts at the forefront of your mind, but in challenging times like these, it highlights how essential it is to talk. And just as with my children, there are plenty of apps and websites that can help you take the first steps.
Varying generational approaches
There is no one way to educate your children about money — what worked for one generation will not necessarily work for the next. Different generations have had to address the different approaches they might take in thinking about money and try to reach a common language to agree on common goals. Whilst many of us grew up with physical pocket money from our parents after completing household chores, today’s young children rarely even touch money, they receive their allowance on an app.
A 2019 study commissioned by RBC Wealth Management and conducted by The Economist Intelligence Unit found that seven in ten younger affluent respondents think that their beliefs about wealth are very different to those of their parents; with a similar percentage, 78%, believing that wealth is less easily attained or preserved today. Early, open and continuous dialogue can only help confront obstacles head on and smooth the path ahead.
These talks also allow HNW individuals and their families to talk about how they can address their non-financial goals, such as fighting climate change or supporting social agendas – something that the younger generation is acutely focussed on. Indeed, more recent social events have led to an ongoing and overdue debate around what privilege looks like and how society needs to change.
With the summer holidays fast approaching, the struggle to keep children occupied will continue, but without the pressure of the school curriculum. This is an opportunity to continue discussions with children about where money comes from and where its value lies.
I have found it tremendously empowering to talk to my children about money and getting back to basics — it may not be school learning, but it is real life learning. And as I say to my clients, the initial step to start a conversation is always the hardest.
From accountants to advisors: changing roles and expectations
By Chris Downing, Director for Accountants & Bookkeepers at Sage
The line between strategic advisor and traditional accountant is blurring. Over the last year, 82% of accountants said their clients were demanding a wider service offering, including business and technology implementation advice. In the current climate this transition has only been accelerated.
Clients increasingly expect their accountants to take a more active role in change management and predicting their cashflow months into an uncertain future. This is enabling businesses to tackle the challenges of day-to-day operations, while keeping an eye on what the post-COVID world will look like, and the support they will need to return to strength.
To solve these new and complex, expectations accountants must develop a different way of working. They will be required to increasingly supplement the traditional, compliance and reporting aspects of their work with business advice and consultancy. To do this, accountants need the ability to move quickly and efficiently, with a firm grounding in technology and data control.
Get straight to the point
The priorities of yesterday are very different to the goals of today. Where businesses once focused on driving growth and efficiency, the objective for many now is continuity – understanding what government support is available and for how long. In the current climate, speed of delivery and client care are top of the agenda.
But the way accountants go about this is very important. Rules are changing every day – the definition of an ‘essential business’, government support and bank loan programmes are constantly in flux. In normal times, an accountant’s role is to ensure their clients are aware of and reactant to these changes. Yet, how much value does this create for them in the ‘now’?
To be valuable, new information must be delivered quickly but it should also be succinct. It isn’t useful for clients to be bombarded with email updates, or reports running into hundreds of pages, trying to explain the week’s changes. With so much present noise, it’s the accountant’s task to break through the information overload and provide the client with crucial resource only.
To understand client pain points and get to the heart of what they really need, a running dialogue is essential. Building individual client relationships will unlock the potential to deliver tailored experiences that meet their business demands. Armed with this insight, accountants can then distil complex information into digestible chunks.
A more entrepreneurial spirit
Sharing insight is only the start. The other half of the story relies on consultancy. In the Covid-19 environment, the routine aspects of an accountant’s work are being supplemented with the transformative changes they can make for clients. Cashflow projections for the next six months are crucial, but even more so is the advice an accountant can offer on improving the financial outlook of a business.
To provide this balance, accountants should embrace a more entrepreneurial way of thinking. Not only advising on how clients can meet current challenges, but also how they can innovate to drive new revenue streams in the future. Part of this means being willing to step outside of their comfort zone. Many firms are already investing in the skills and technologies they need to service novel demands – like advising on relevant accounting and finance technologies.
While many businesses remain closed to the public, even as lockdown eases, they have increased capacity and flexibility to shift operations towards what will be most effective and profitable. Clients will be open to changing their business focus to meet demand spikes in other areas as they do not have to account for a disruption to customer service. For example, many distillers shifted production from beverages to hand sanitiser while bars and restaurants were closed.
With their contextual understanding of client finances, accountants are uniquely placed to advise their clients on change and guide them through the transformation process. Though this requires a more innovative model of accounting, and one that is willing to embrace the latest technologies.
Truth in the cloud
Business advice needs to be backed by data, especially for accountants engaging directly with the CFO. Scenarios need to be modelled, analysed, tracked and compared over time to arrive at the most effective proposal for the client. This is outside the wheelhouse of traditional accounting, but it’s becoming necessary in an industry heavily disrupted by new technologies.
To keep up with the ever-growing need for rapidly available data and analytics capabilities, more and more accountants are turning to the cloud to consolidate and use their data estate, while automating the time-consuming tasks of data management. Indeed, the majority (91%) of accountants have said new technology has delivered fresh value to their business in the last year, whether it increases productivity or frees up more time to focus on client needs.
Against the backdrop of coronavirus and technological disruption, a new breed of accountant is quickly emerging. Innovation is possible for those who stay ahead of client expectations and are aware of their needs, embrace an entrepreneurial mindset and adopt the latest cloud and automation technologies. In this way, an accountant becomes an integral part of their client’s business.
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