Tanya Thomson is the principal of Tanya Thomson Law, a boutique law firm specialising in competition, energy and commercial law. This is the fourth in a four-part series of articles on trade practices law for SMEs, covering the main competition and consumer protection legislation and also looking at the value of compliance programmes.
Headlining an article with the words "compliance programme" is probably not the best way to grab readers' attention. Telling businesses to think about compliance is like telling people to eat their greens - they know they should, but they would rather do something else (invest in exciting new technology/ eat icecream).
Often this is because businesses assume that compliance programmes will be expensive, complicated and won't bring obvious benefits. In fact, a good compliance programme should be straightforward and deliver immediate benefits. There is an insurance element to compliance programmes - by definition they are designed to reduce the risk of breaching the law, and if there is an inadvertent breach may lessen the likelihood of prosecution or of a significant penalty. But properly implemented compliance programmes also deliver immediate benefits in increasing service levels and customer satisfaction.
What exactly is a compliance programme?
Put simply, it is a system that is designed to ensure your business complies with the law - in this case with the trade practices and consumer protection laws that have been the subject of this series - the Fair Trading Act, the Consumer Guarantees Act and the Commerce Act.
The nature and extent of a compliance programme will depend on the size and complexity of the business, but will usually cover at least these elements:
• training for staff covering legal obligations and what this means in practice
• development and implementation of policies to ensure compliance (quality checking, checking promotional material and pricing etc)
• processes for dealing with breaches and complaints (complaints handling, reporting and correcting errors, providing remedies to customers and taking steps to ensure mistakes are not repeated).
Key Factors in a Successful Compliance Programme
Regardless of size, the key determinant of a successful compliance programme is a commitment to a culture of compliance. Your business needs to treat compliance as important and to communicate and demonstrate that to all staff and to its customers. What this translates to depends on the size of the business.
• Ideally all staff should be involved as full coverage is part of establishing a compliance culture. If it is not feasible for all staff, it is especially important that frontline staff and those responsible for product information (including advertising) are trained properly. In some cases this may be the most junior member of staff - such as person answering the phone.
• Compliance training must communicate the importance of compliance. If you schedule it on a Friday afternoon (or worse, expect staff to give up their own time) you are sending a message that training is not important to the company.
• It is preferable to have compliance and training that is specifically tailored for your business so staff can be trained on how to deal with specific situations. However, if this is not realistic, there are other options available. Your industry association may provide compliance programmes or training (although care needs to be taken in undergoing training with competitors).
• New employees should undergo training as soon as possible. If it is not possible for them to attend full compliance training immediately, consider shorter compliance programmes as part of induction.
• Ensure that complaints are handled quickly and seriously and that the reason for complaints is fed back into the system and addressed. Repeated consumer complaints are an indicator of systemic failure and can lead to regulatory investigation. Often timely and reasonable action can prevent complaints being taken further.
• Correct errors as soon as you realise they exist - often businesses are reluctant to pull advertising or reprint promotional material, but not doing so runs a real risk of breach. Minor errors can sometimes be dealt with by "at the counter" corrections.
• Compliance programmes should not be static - there is no point having a compliance manual if it is primarily used as a doorstop. While documenting compliance systems and policies is a good idea, this should be accompanied by training updates and regular reviews of the system, and incorporation of new legal developments.
• Consider the impact of the wider business culture on compliance. A business culture of "win at all costs" is unlikely to foster compliance - for example, a common problem is incentivising sales staff solely on sales volumes, which can result in overselling and resultant complaints. At the same time being committed to compliance should not be interpreted as being overly risk averse.
If your business is very small (including if you are a sole trader) some of these factors may not be relevant - but scaling down does not mean abandoning the concept. Some aspects (like full coverage!) are easier to achieve and others can be tailored for your circumstances.
Adopting a compliance programme that incorporates all these elements does require a financial and time commitment. Businesses facing recession conditions may feel that training is a non-core cost they cannot afford.
However, this can be false economy as the biggest cost of training is almost always in management time. Management time when you are busy is extremely valuable - how many people have missed out on professional development because they were simply too busy to get away? When things slow down is the time to invest. It also has the added benefit of keeping you and your staff interested and up to date at a time when morale might be low.
Lastly, think about how your business can develop a compliance culture that fits into your organisational model. A business I once worked for had an item of the (fairly complex) compliance manual read out at each weekly team meeting. Yes, it was excruciatingly boring - but it did keep compliance in the front of everyone's minds and it sort of sunk in by osmosis. Perhaps your business can accept the challenge to cultivate compliance in a more creative way.
Tanya Thomson
