Regulation and policies not improving ethics in business

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Increased regulation and policies around fraud and corruption are not translating into more ethical behaviour, professional services firm EY has found.

According to EY’s 2015 Europe, Middle East, India and Africa (EMEIA) Fraud Survey, while 46% of UK businesses said regulation in their sector had increased in the past two years, only 15% reported it having a positive impact on ethical standards in their company.

Less than a third (28%) described their own firm’s ethical standards as “very good”, but this beats the EMEIA average of 26%.

While the survey found most companies to be implementing policies and procedures around fraud and bribery, there appears to be a gap between policy and action. For example, 60% said their organisation has an anti-bribery or anti-corruption policy and code of conduct, but only a quarter (25%) stated action had been taken against staff for breaches.

On whistleblowing, 79% reported that their company has a whistleblowing hotline, but only 28% said management always follows up on whistleblowing reports. This is less than the EMEIA average of 32%.

More encouragingly, it appears UK workers have a greater awareness of the bribery act than in 2013. In 2013, 19% said that offering personal gifts would be justified to help their business survive. This year only 5% agreed with that statement.

Overall 27% of UK respondents believe bribery and corruption is widespread. This is down from 37% in 2013 and much lower than the EMEIA average of 51%.

EY partner and head of fraud investigation and disputes John Smart said policies are “just one lever” in managing fraud, bribery and corruption risks.

“Changing culture and behaviour is a difficult and long-term process,” he said. “It appears that UK employees have heard it all before on anti-bribery and anti-corruption issues and are lacking faith in senior management to clean up.”

He added: “In order to meet the corporate ethics challenge, boards will need to supplement their anti-fraud, bribery and corruption policies with consistent messaging from the top, together with the right enforcement, rewards for whistleblowers and highlighting role models.”

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