UK Finance has published guidance for the financial services sector on the failure to prevent fraud offence, which takes effect in September. The guidance cannot have statutory force or Government blessing, as the ECCTA does not allow for this. So the Home Office guidance would take priority over the sectoral guidance. The guidance focuses on:
- interpretation and understanding of the law – including considering what a “fraud” offence is, encouraging, assisting or procuring and who is covered. It also looks at what “benefit” is necessary for the offence to apply and the interaction of the offence with other financial crime offences;
- what reasonable prevention procedures might be proportionate – including how to apply them in the supply chain and the effects of commercial negotiating power; and
- where it would not be reasonable to have reasonable prevention procedures – giving examples such as firms that provide services entirely outside the UK, listed companies in certain contexts, existing contractual commitments and data protection restrictions on associated persons.
The guidance gives examples of when the offence may be committed and what is outside scope, and examples of third-party relationships that do not mean the third party is an “associated person” of the relevant firm.