A monitor is a Court appointed individual who will assess and report on the effectiveness of a company’s compliance and ethics policies and procedures over a defined period, following a criminal or regulatory breach.
Although monitors have been used regularly in the US over the past few decades, with a marked increase in their use post-Enron, they have not been used with the same frequency in the UK. With the introduction in February 2014 of deferred prosecution agreements, this is set to change.
Monitorships are not a compulsory feature of a DPA and were put in place for the first two DPAs announced by the Serious Fraud Office (SFO) against Standard Bank and XYZ Limited, however they may be imposed where companies do not already have effective corporate compliance programmes in place. The DPA code sets out a detailed framework for the appointment of monitors, including that companies will be responsible for all of the costs of the monitorship (including the prosecutor’s costs) and must give the monitor complete access to all relevant aspects of its business.
Monitors are also an increasing feature outside the DPA setting. The Public Contracts Regulations 2015, in force since February 2015, allows companies who are debarred from bidding for public work to recover their eligibility for such work by demonstrating that they have “self-cleansed”. One of the steps is through the introduction of measures to avoid future criminal offences. Companies could instruct monitors to demonstrate their commitment to this course, using the report in the bidding process as evidence of their remediation.
Monitors are not a soft option – they can be very expensive and intrusive. Therefore a company should play an active role in identifying its monitor and consider appointing one before they even enter into DPA negotiations to demonstrate its commitment to change.
Increasingly, regulators are asking companies to undertake an independent review of their systems and controls as part of a settlement following a regulatory breach in order that they can be satisfied that the same conduct will not be repeated. This can include reviewing anti-money laundering policies to ensure they are being implemented and understood by all employees. Although not quite a monitorship, these reviews can be equally intrusive and the company will have to make available staff for interview and records for inspection. Our team is experienced in conducting these reviews in a way that minimises any disruption to business.
The team at Kingsley Napley understands the complexities and sensitivities of acting as a monitor and the importance of building a relationship of trust with the company at a competitive price. We provide rigorous testing of the existing controls to ensure they are fit for purpose and minimising the risk of repetition of the company’s misconduct.
As monitor we enable continuous, open and frank dialogue with the company to ensure that there are no surprises at the end and the company has a good opportunity to react to points raised and take them on board.
Partner and Head of Department
Professional Support Lawyer
Michael Caplan QC
Senior Associate (Barrister)