The FSA has used a breach of the Principles for Businesses to call Aon (the risk management and insurance company) to account for inadequate systems and controls specifically related to preventing corrupt activity in connection with the promotion of their business in high risk jurisdictions.

Aon discovered two suspicious groups of transactions involving third parties in June 2006. A proper assessment was not undertaken until May 2007, following enquiry from an overseas enforcement agency. Shortly afterwards Aon self-reported the potential irregularity to the FSA.

Aon's review and the FSA investigation resulted in the identification of 66 irregular payments to foreign parties operating in Bahrain, Bangladesh, Bulgaria, Burma, Indonesia and Vietnam, and the imposition of a GB£5.25 million financial penalty.

The penalty was in respect of behaviour on behalf of the corporate which was neither deliberate nor reckless, in circumstances where the company had compliance measures in place, including third party authorisation and payment procedures, a code of conduct and an annual self certification process to ensure that staff had read the code.

In the FSA's view these were clearly not enough and more focused training, better due diligence processes concerning business acquisition in high risk jurisdictions and better monitoring of those processes were required.

The FSA's Final Notice was the outcome of a settlement agreement and the standards set out in the Notice were not the subject of any judicial scrutiny, are not necessarily binding precedent and do no more than state the regulator's expectations of the standards required.

But it serves to demonstrate that, in the regulated world, if something goes wrong, the presumption of the regulator will be that the systems and controls designed to mitigate the risk of that happening are inadequate and it will require proof of a well documented and impressive system to rebut that presumption. Further, the Notice shows the importance of an organisation acting promptly in relation to its systems and controls and not just focusing on the incident of corruption itself.

This result may be a foretaste of things to come in the fight against corruption and other instances of unethical behaviour. The FSA is able to use its enforcement powers within the regulated sector for these purposes. However, the Law Commission has recently recommended, and in due course we can expect to see, new legislation on corruption which will expose all companies to criminal sanctions where they are found to have inadequate systems in place to deter corrupt activity when it occurs. Any conviction for this new offence, however, would be by a jury verdict rather than as a consequence of an administrative decision by a regulator.