‘More than half’ unaware of regulators

07/04/2008

Directors who do not fully understand their business’ compliance obligations are putting themselves at risk of heavy fines or even imprisonment, new research has found.

More than half of business leaders are unaware that they are regulated by the Environment Agency, the Office of Fair Trading, or the Pensions Regulator, who have jurisdiction over every company operating in England.

Law firm Nabarro, who ran the study, said there is wide-spread ignorance and confusion about the full range of the regulators and their powers.

The group added that while penalties for regulatory breaches are growing, businesses are failing to train their staff about regulatory obligations.

More than two thirds admitted to never having run a training programme for staff on diversity matters, over 60% said they have never trained their staff on pension regulations, almost 70% haven’t provided training on competitions issues, and one in seven haven’t trained their employees on their environmental obligations.

In 2006, the Environment Agency successfully made £3.5m in fines, and prosecuted 29 individual company directors, holding them personally accountable for their business’ failings.

Jonathan Warne, a partner at Nabarro, said: “The rapid increase in regulation and the consequent increase in the exposure to reputational and regulatory risk is one of the biggest worries for companies today. Maximising awareness and minimising risk is therefore paramount.

“Many regulators have the power to search premises and take away documents. In some cases, it is a criminal offence to fail to co-operate with an investigation. Businesses are therefore advised to develop proper internal procedures to ensure that all staff are aware of the rights and obligations in these situations,” he said.