Corporate compliance programs

Competition policy reform is not just about lower prices - it is about a blend of prices, service and quality

Businesses of all types can benefit from putting in place measures aimed at improving relations with their customers. Giving greater consideration and attention to the needs of customers is one way a business can become more competitive.

A corporate compliance program is one measure businesses can use to enhance their competitiveness by becoming more customer focused.

What are corporate compliance programs?

Corporate Compliance Programs are internal self-regulatory mechanisms that aim to ensure that your business meets its legal obligations.

Compliance programs can relate to just fair trading and trade practices legislation, or they can be incorporated into an overall legal compliance strategy. They can also be used to help you meet internally-driven obligations, such as customer service standards.

Why should businesses be interested?

If you are concerned about:

improving customer relations and enhancing your reputation;
effectively assessing and managing risks;
avoiding financial and other costs of litigation; and/or
increasing staff awareness, so that your staff are less likely to breach the law,
then you could consider establishing a corporate compliance program.

While all of these factors are important, the avoidance of litigation will often be a prime motivator for establishing such a program because:

National competition policy reforms make compliance programs even more significant, as Part IV (the "Competitive Conduct Rules") of the Trade Practices Act will apply to all businesses, regardless of their form of ownership.
Decided cases under the Trade Practices Act (TPA) make it clear that it is the responsibility of management to ensure that staff are aware of their obligations under the TPA. Whether a business has a corporate compliance program in place is relevant to the courts assessment of penalties for breaches of the Act.
The maximum penalties for offences against the TPA provide a strong incentive for corporate compliance programs. These have been increased to $10 million for a corporation. Individual directors and managers are also liable to large fines and the courts have power to award damages to those suffering loss due to a breach.
All WA businesses are subject to legal obligations, such as the avoidance of misleading, deceptive or unconscionable conduct, under the Fair Trading Act. The fines for breach of this Act are up to $100,000 for corporations and $20,000 for individuals.
Implementing an effective corporate compliance program not only helps reduce any penalty that may be imposed, it also reduces the possibility of a breach occurring in the first place. It provides a framework in which possible breaches of the legislation can be identified and rectified before someone else (such as the ACCC, a supplier or a customer) commences an action for a breach.

Basically, implementing a corporate compliance program makes good business sense.

Most of the elements of a corporate compliance program – effective complaint handling systems, educated staff, checking of promotional material – are things that successful businesses do anyway.

How to put an effective corporate compliance program in place

The essential elements of a successful corporate compliance program are set out below.

In larger organisations, the necessary roles may be carried out by a number of staff, or even a management unit, while in a smaller business compliance may only need to be part of someone's duties.

Training and education for staff about relevant legislation and how to comply with it. This should be practical, understandable and provided on a routine basis. It may include examples relevant to the industry concerned.
Compliance manuals that set out the operation procedures of the particular business and relevant standards can be used to supplement staff training.
Commitment of a business to a corporate compliance mechanism needs to start at the top. This will help create a positive compliance culture within the organisation and demonstrate how seriously the business takes its commitment to complying with the relevant laws. Lip service will not be enough.
Sufficient resources must be allocated for effective corporate compliance.
Responsibility for overseeing the compliance program should be given to a designated person who has a good knowledge of the trade practices law.
Visibility to all staff of the compliance policy of the business and how it is to be implemented. This should include arrangements for staff to report instances of non-compliance.
Monitor the operation of the compliance program, to ensure that it is delivering effective outcomes. This will require developing performance indicators against which the effectiveness of the program can be measured.
Identify the areas of risk created by the operations of your business, so that these can be managed.