Stepping Stone 07 Anti-bribery and corruption
Introduction
UN Sustainable Development Goals make an explicit link between corruption and peaceful, just and inclusive societies.
Through compliance with the FCA Principles for Business and legal obligations imposed by the Bribery Act 2010, members will be making a significant contribution to the achievement of this sustainability goal.
Ethical integrity is a cornerstone of the professionalism that the insurance industry is based upon. Members should be able to identify this topic as a strength of any ESG strategy.
FCA Principles for Businesses
Members will already be contributing to this achievement of this goal through their regulatory responsibilities concerning anti-bribery and corruption, covered in the FCA’s Principles for Businesses:
- a firm must conduct its business with integrity (Principle 1)
- a firm must conduct its business with due skill, care and diligence (Principle 2)
- a firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems (Principle 3)
In addition to compliance with these principles, members are also required to establish and maintain effective systems and controls for countering the risk that the firm might be used to further financial crime (FCA rule SYSC 3.2.6R).
In focus: TR14/17 – Managing bribery
and corruption risk in commercial insurance broking
A thematic review undertaken first by the FSA in 2014
and then updated by the FCA in 2021 found that most intermediaries sampled did not yet
adequately manage the risk that they might become involved in bribery or corruption.
More than half of the intermediaries in the sample had taken some steps
to assess and manage bribery and corruption risk, but for the majority of
these intermediaries, this work was still in progress and more had to be
done before their anti-bribery and corruption systems and controls would be effective.
Bribery Act 2010
In addition to the FCA’s regulation of the insurance industry, members must comply with the Bribery Act 2010 (UKBA).
Alongside offences of offering and receiving a bribe, UKBA created an offence committed by commercial firms which fail to prevent persons associated with them from committing bribery on their behalf.
It is a full defence for a firm to prove that, despite a particular case of bribery, it nevertheless had adequate procedures in place to prevent persons associated with it from bribing. The FCA’s update TR14/17 raise the question as to whether the majority of members would have the benefit of this defence in the event that an employee or associated person was found guilty of offering a bribe.
Actions for members
Where members do not already have in place an anti-bribery and anti-corruption policy, this provides a good way to demonstrate a commitment to fair and responsible business and prohibit all forms of bribery and corruption, as well as address business conduct that risks creating the appearance of improper influence. A quick search of the corporate websites for large insurers and brokers will provide lots of examples for inspiration.
A good starting point is:
- Ministry of Justice Bribery Act Guidance – A Quick Start Guide and more Detailed Guidance
- Transparency International UK Guidance, Diagnosing Bribery Risk – for more detailed guidance on the conduct of an effective underlying bribery risk assessment
- Helpful guidance regarding anti-bribery and corruption in commercial insurance broker was produced by the FCA’s predecessor, the FSA.
- FCA report, Managing bribery and corruption risk in commercial insurance broking: update
Key KPIs to adopt
- Total number and percentage of governance body members that are informed and trained on the firm’s anti-bribery and corruption policies and procedures
- Total number and percentage of employees that are informed and trained on the firm’s anti-bribery and corruption policies and procedures
- Total number and percentage of business partners that the firm’s anti-bribery and corruption policies and procedures have been communicated to
- Total number and nature of confirmed incidents of bribery and corruption
- Total number of confirmed incidents in which employees were dismissed or disciplined for bribery and corruption