By Victoria Preece, Chief Compliance Officer – allpay Limited
“Compliance with competition law does not always receive the attention it deserves. I would like to see anti-competitive behavior taken seriously by UK companies and boards alongside corruption, fraud, health and safety and cybercrime risks. Lord David Currie, Chairman, Competition and Markets Authority (Competition Law Risk: Short Guide V 2.0).
“Holding back is a wonderful thing” and “Prevention is better than cure”. We’ve all said those well-known phrases in our lives but if we knew what to do to avoid the need for hindsight, we’d still be doing it?
As a compliance professional, I will always look for risks and advise you to do whatever you can to reduce or mitigate them. Sometimes you have to accept them, but at least you paid attention and took them seriously. If we had followed Lord Currie’s advice, and in hindsight, we would have paid as much attention to the risks associated with competition law as we do every day by diligently monitoring and managing our fraud or security risks. .
Our own experience began in 2017 when, after reporting an incident of concern to regulators, we found ourselves trapped in the ensuing “cartel behavior” investigation.
Ironically, had we not taken the first steps to raise the flag, it is likely that the behavior of several of the industry network meeting attendees involved would never have been revealed, uncovered and subsequent fines would not have been imposed; but not reporting was never a thought.
Under competition law, “merely being in the room” can effectively lead to the guilt of an individual or a company, by association. Seeing our reputation tarnished alongside other network members we had innocently joined is something allpay will have to deal with.
However, as ‘whistleblower’ or ‘complainant’, the terms regulators prefer, we had the overwhelming feeling that there was no sense of proportionality in the way each company was treated. We were completely unprepared for the five years of investigation that followed and although we raised concerns about a clear act of anti-competitive behaviour, we did not consider that the industry meetings to which we had naively assisted were related to distinct and clearly anti-competitive activities. -competitive act that we had reported.
Similarly, in December 2016, a representative from Balmoral Tanks attended a meeting of what turned out to be a cartel, a cartel they refused to join. It ended with the same result, with the regulator acting against all parties, including Balmoral Tanks despite their refusal to join the cartel.
Although Balmoral Tanks knew they were reporting cartel behavior and we did not, we had to accept a fine while strongly denying ever knowingly joining or agreeing to participate in a cartel. We now know that we were ignoring the cartel’s request not to compete, but we did not realize that we were indeed part of this cartel.
However, another well-known phrase is “ignorance of the law is no defence” and in hindsight we might have known, in fact, we should have known that stepping out of our organization into an environment with other competitors entails a risk related to competition law. We needed more training across the business to mitigate this risk. On reflection a small investment to face the fines imposed by the Regulators.
Looking back, we accept that the regulator has a job to do, it seeks to identify where the law has been broken and bring those criminals to justice. And that’s exactly how it feels, you’re a criminal, even if you weren’t in the room, or even as a manager unaware that those networking meetings that other people in the company attend , you still bear the blame attached to the reputational damage that comes from the media reports of this whole sad affair.
Allpay employees felt disappointed in themselves, in us as a company, let down by misinformed behavior. Although I was not on the board of allpay when this started for us, I feel the outcome and the damage to our reputation weighs heavily on my mind as I have a duty to protect the staff, the company and, above all, the vulnerable clients to whom we serve. Support.
The Payment Services Regulator (PSR) engaged with us after the investigation as we reached out to them to try to understand what else can be done to protect other businesses from suffering from their investigation process , And that’s the case ! It drains your time, energy, resources and ends up undermining a hard-fought reputation after being portrayed as “guilty” among those attention grabbing media headlines.
In his response, Chris Helmsley, the chief executive of PSR, reminded us that regulators are there to protect end users, customers, by ensuring that anti-competitive behavior is stopped. Does this mean that we, allpay, having been found guilty (unintentionally) of cartel behavior, do not have the protection of our customers at the heart of our business?
As Chief Compliance Officer, one of the many hats I wear is that of MLRO (Money Laundering Reporting Officer) and alongside the rest of the Board, I work hard to ensure the protection of often very vulnerable customers. with whom we work, even when it has not been commissioned for us as an electronic money institution.
APP or Authorized Push Payment Fraud is a very real threat to anyone using a payment account to transfer funds, and our customers are using a faster payment system to pay their healthcare bills every day. Last year, we made the strategic decision to invest in a payment confirmation service for our prepaid card account holders. We developed our own software solution and paid significant fees to register with PAY UK to complete the implementation (due May 2022). We did this to add an extra layer of protection for our customers, not to meet a regulatory requirement, and not for an enhancement that we will charge customers extra for, it seemed like the right thing to do to offer our customers the best possible protection. .
We make decisions every day in the interest of our customers. Being found guilty of breaching competition law for reporting anti-competitive behavior within our industry has been doubly painful.
Do we want to raise concerns again? Absolutely, without hesitation, but we are better equipped to understand the painful process that PSR takes you through, without support or direction. We agreed to an expedited process, again in hindsight, not understanding what that meant in terms of being able to manage the process to better help us. We thought we were helping the regulator save time and money and make a decision sooner. In fact, we had agreed that our potential guilt, and then our actual guilt, would be made public twice.
And so, why share this story of misfortune with a wider audience? It is behind us and we move forward stronger and wiser. However, if nothing good comes from our experience, an opportunity has been missed. Every business owner, board member, executive, and senior executive might already know that if they don’t pay enough attention to competition law, they risk a long and reputation-damaging journey. But can you ask yourself the following questions and say yes to them with confidence?
• Do we know what our current antitrust compliance risks are?
• What activities in our business model are likely to create situations where competition law becomes problematic?
• Do we have a healthy culture in our organization regarding CMA risk?
If you do nothing more, review your training and make sure your employees have completed it. How do you know that the meeting or conference you are going to next week is not leading to an investigation by regulators? It may sound a little dramatic, but it’s the reality we’ve been through……and we can all do with a little less drama in our lives!
“I was just going to a meeting to shake a few hands. It was almost a social occasion where you just said hello to your rivals in the industry. I didn’t really think about it…Amazing stupidity in hindsight. From Does Prison Work For Cartelists? – The view behind bars. An interview with Bryan Allison by Michael O’Kane (The Antitrust Bulletin: Vol 56, No. 2, Summer 2011)