As the new year starts afresh for many business, compliance and legal departments alike are busy figuring out their budget priorities for the year. This is often not an easy exercise given the myriad of priorities and often limited budget. Expectedly, certain matters are placed on the back burner, as is often the case for compliance manuals and protocols.
On the rare occasions where budgets (albeit limited) are indeed allocated for the review and update of compliance manuals and protocols, three common situations are often observed:
- The (very) dated manual: we have seen compliance manuals that were last updated as far back as eight years ago. As laws and regulations do change (and increasingly at a quicker pace than before), an outdated compliance manual carries with it the real risk of irrelevance and worse, contains inaccurate guides on the applicable laws. Cosmetic and superficial updates to outdated manuals carry similar risks of irrelevance and inaccuracy.
- The "global" manual: another practice very commonly observed amongst businesses operating in multiple jurisdictions, is the manual essentially prepared for a single jurisdiction being adapted wholesale for all other jurisdictions in which the business operates. While there is certainly a case for a de-minimis approach to compliance manuals (i.e., by finding the common denominator of the legal principles applicable across jurisdictions – again, a phenomenon often precipitated by limited budgets), such manuals run the risk of prescribing guidelines and principles which are simply not relevant or applicable in the other jurisdictions and worse, in violation of local laws.
- The (over)simplified manual: many compliance manuals and protocols are also guilty of being oversimplified. In compliance manuals and protocols we have sighted, many assume that the powers of unannounced inspections or dawn raids are the same across all authorities. This is clearly not the case. Certain authorities have the powers to conduct dawn raids without warrants and compliance manuals and protocols that insist on sighting such warrants run the risk of employees inadvertently obstructing the lawful search powers of the regulators.
While there is no magic number to the ideal frequency for compliance manuals and protocols to be updated or how local manuals should be structured, a simple R-E-S-T-O-R-E approach to compliance manuals and protocols can be adopted.
- Regular Updates – Ensure regular updates and review of the manuals and protocols for relevance and currency. While a robust compliance policy is recognised as a mitigating factor in competition law infringements in certain jurisdictions, a limited budget excuse is not.
- Easy to Understand – Manuals and protocols should be easily understood across all levels of employees using simple and relatable language.
- Short and Succinct – No one likes reading long documents – so keep them short and succinct. TL;DR really does apply.
- Training – Compliance principles are often less impactful when not put in practice. Where possible, these should be supplemented by regular compliance training and practice by mock exercises.
- Observe – Monitor and observe the efficacy of the manuals and protocols against reported non-compliance. Compliance manuals and protocols (even if updated) are meaningless if non-compliance remains rampant.
- Remind – Take the opportunity to remind employees of their obligations to adhere and abide by the compliance manuals and protocols. Annual self-declarations of compliance can serve as useful reminders.
- Evaluate – Evaluate the efficacy and relevance of the compliance manuals and protocols in the wider compliance efforts. It is after all just one of the many tools in the compliance toolbox.
As the oft quoted saying goes, prevention is better than cure. If compliance manuals and protocols are to be a worthy first line of defence in fostering compliance, the case for ensuring their regular update cannot be understated, budget-permitting or otherwise. Indeed, the weakness of any best laid plans often lie with complacency. It is perhaps timely to apply the RESTORE acronym and allocate the much needed budget in updating the compliance manuals and protocols. It is after all the lowest hanging fruit in any compliance effort.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
