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By Victoria Preece, Compliance Director – allpay Limited
“Competition law compliance is not always given the attention that it deserves. I would like to see anti-competitive behaviour taken as seriously by UK businesses and boards as the risks around bribery, fraud, health and safety and cybercrime.” Lord David Currie,
Chairman, Competition and Markets Authority (Competition Law Risk: Short Guide V 2.0).
‘Hindsight is a wonderful thing’ and ‘Prevention is better than cure’. We have all said these well-known phrases in our lives but if we knew what to do to prevent the need for hindsight surely, we would always do it?
As a Compliance professional I will always look for the risks and advise that you do all that you can to reduce or mitigate them. Sometimes you must accept them, but at least you have paid attention to them and taken them seriously. If we’d 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 in diligently monitoring and managing our fraud or security risks.
Our own experience began in 2017 when, after raising an incident of concern to the Regulators, we found ourselves ensnared in the investigation into ‘Cartel behaviour’ that followed.
Ironically, if we hadn’t made the initial steps to raise the flag, it is likely that the behaviour of several attendees of the Industry Network Meeting involved would never have come to light, left undiscovered and the subsequent fines unlevied; but not reporting
was never a thought.
Under competition law, ‘just being in the room’ can effectively lead to an individual or business being guilty, by association. Having our reputation tarnished alongside others within the Network that we had innocently joined is something allpay will have to
deal with.
However, as ‘the informant’ or ‘the complainant,’ the terms that the Regulators prefer, we had an overwhelming feeling that there was no sense of proportionality to the way each company was dealt with. We were very unprepared for the five years of investigation
that followed and although we had raised concerns about a clear act of anti-competitive behaviour, we had not considered that the industry meetings that we had attended with naivety were linked to the separate and clearly anti-competitive act we had reported.
Similarly in December 2016, a representative of Balmoral Tanks famously attended one meeting of what turned out to be a cartel, a cartel they refused to join. It ended in the same result, the regulator acting against all parties, including Balmoral Tanks despite
them refusing to join the cartel.
Although Balmoral Tanks knew that they were reporting cartel behaviour and we did not, we have had to accept a fine whilst strongly denying ever knowingly joining or agreeing to participate in a cartel. We now know that we were ignoring the request of the cartel
not to compete but did not appreciate that we were effectively in that cartel.
However, another well-known phrase is ‘ignorance of the law is no defence’ and looking back we could have known, indeed should have known that stepping outside our organisation into an environment with other competitors is fraught with competition law risk.
We needed more training across the whole business, to mitigate that risk. On reflection a small investment to make versus the fines imposed by the Regulators.
In hindsight we accept that the Regulator has a job to do, they seek to identify where the law has been broken and bring those criminals to justice. And that is exactly how it feels, you are a criminal, even if you were not in the room, or even as a director
unaware of those Network Meetings being attended by others in the business, you still bear the blame attached to the reputational damage that comes from the media reporting of the whole sorry affair.
Employees at allpay have been left feeling disappointed in themselves, in us as a business, let down through uninformed behaviour. Although not a member of the allpay Board when this started for us, I feel the outcome and damage to our good name weigh heavy
on my mind as I have a duty to protect the staff, the business and importantly the vulnerable customers we provide services to support.
The Payment Services Regulator (PSR) have been in dialogue with us post investigation as we reached out to them to try to understand what else can be done to protect other businesses from suffering their investigation process, and suffering it is! It drains
you of time, energy, resources and ultimately undermines hard fought reputation after being portrayed as ‘guilty’ among those attention-grabbing media headlines.
In his response Chris Helmsley, the Managing Director of the PSR, has reminded us that the Regulators are there to protect end users, customers, by ensuring anti-competitive behaviour is ended. Does that imply that we, allpay, having been found guilty (unwittingly)
of cartel behaviour, do not have our customer protection at the heart of our business?
As the Compliance Director, 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 that the often very vulnerable customers we work with are protected, even when it has not
been mandated for us as a E- money Institution.
APP or Authorised Push Payment Fraud is a very real threat facing anyone who uses a payment account to transfer funds, and our customers use faster payments system to pay their care bills every day. Last year we took the strategic decision to invest in a Confirmation
of Payee service for our Prepaid Card accountholders. We developed our own software solution and paid a significant fee to enrol with PAY UK to complete the implementation (due by May 2022). We did this to add an extra layer of protection for our customers,
not to meet a regulatory requirement, and not an improvement we will charge customers extra for, it just felt like the right thing to do to give our customers the best protection we can.
We make decisions in the interests of our customers every day, so to be found guilty of breaking Competition Law for having reported anti-competitive behaviour within our industry has been doubly painful.
Would we raise concern again? Absolutely, without hesitation, but we are better equipped to understand the painful process that the PSR take you through, with no 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 help ourselves better. We believed we were helping the Regulator save time and money and get to an earlier decision. In fact, we had agreed to have our potential guilt and then our actual guilt publicly
reported on twice.
And so, why share this tale of woe with a wider audience? It’s behind us and we are moving on stronger and wiser. However, if nothing good comes from our experience then an opportunity has been missed. Every business owner, Board Director, Executive and Senior
Manager may already know that if they don’t not pay enough attention to competition law then they risk a long and reputationally damaging journey. But can you ask yourselves the following questions and confidently say yes to them?
• Do we know what are our present competition law compliance risks?
• Which activities in our business model are likely to create situations where competition law becomes an issue?
• Do we have a healthy culture in our organisation in respect of CMA risk?
If you do nothing more, review your training and make sure your people have completed it. How do you know that the meeting or conference you are going to next week isn’t leading to an investigation by the Regulators? That may feel a little dramatic but that
is the reality that we have 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 give it any real thought… Staggering stupidity with the benefit of hindsight.” From Does Prison Work for
Cartelists? – The view from behind bars. An interview of Bryan Allison by Michael O’Kane (The Antitrust Bulletin: Vol 56, No. 2, summer 2011)
cma-risk-guide-2016-revised-v2.pdf (theirm.org)
Financial Services
