With regulators promising swifter action and more dawn raids, are you prepared for when the regulator comes knocking on your door? |
By Hollie Mortlock, Claims Advocate, Financial Institutions at WTW Dawn raids by regulatory authorities are becoming increasingly common as part of enforcement actions across the financial and professional sectors. In the UK, the Serious Fraud Office (SFO) has recently been vocal about increasing dawn raids. Being prepared for such an eventuality is essential for minimising disruption and protecting your organisation's interests. This guide aims to provide practical advice on how to prepare for and respond to a dawn raid, drawing on WTW's experience in risk management and compliance. Are your employees or your buildings’ reception staff sufficiently prepared in the event of a surprise onsite inspection by a regulator? Dawn raids can be stressful for everyone involved. How your employees react during a dawn raid may have an impact on the outcome of any regulatory investigation. It is therefore important that your staff know what to expect and how to respond should a dawn raid occur. It is important to co-operate with the regulators. We recommend that you consult with your legal advisers in preparation for a dawn raid. It is essential that you instruct your in-house legal team or external legal advisers if you are required to respond to any inspection by a regulator. Here are a few things you may want to consider as part of your own company procedures when it comes to managing a dawn raid. Pre-raid preparation
Clarify entry and purpose
Establish a crisis cascade
Inform and instruct staff During the raid
Verify official documentation
Legal support coordination
Documentation and identification
Manage the inspection process Your legal team may want to discuss with the officials the nature of the inspection and discuss and agree how the inspection is going to be carried out. It may be good practice to obtain certain information such as:
Whose records will be reviewed and in what order? Discuss with your legal team regarding any concerns about legal privilege or relevance regarding certain documents, or whether you are required to sign any documentation. After the inspection Here are a few steps you may want to consider once the inspection has finished:
Inform all employees that the inspection has ended;
Additional risk management considerations
Review and update policies
Data management
Insurance implications With a likely increase in dawn raids, you may want to consider discussing the following with your broker:
What costs could be incurred in an emergency situation and what consent is required?
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