By Daniel Hunter

The UK is making progress in tackling fraud and corruption but regulators, boards, and enforcement agencies are still struggling to translate policies into improvements in ethical behaviour, according to the EY.

The bi-annual survey polled 3,800 employees of large businesses in 38 countries, including 100 in the UK. It revealed that 46% of UK respondents thought the level of regulation in their sector had increased in the past two years. However, only 15% said it was having a positive impact on improving ethical standards in their company. Less than three in 10 (28%) of respondents in the UK also rated their own company’s ethical standards as ‘very good’, narrowly ahead of the EMEIA average of 26%.

John Smart, Partner and Head of EY’s Fraud Investigations and Disputes team, said: “While progress has been made in the UK on tackling overall fraud and corruption, high-profile scandals, such as LIBOR and FX rigging, have thrust corporate ethics into the spotlight and highlights the need to ensure that the right behaviours and values are being fostered at every level of an organisation, from the boardroom to the office floor.

“Regulators and enforcement bodies, inevitably, have a huge role to play in helping organisations uphold integrity and ethics. However, policies are just one lever among many for managing fraud, bribery and corruption risks. Changing culture and behaviour is a difficult and long-term process.”

Disconnect between boardroom policies and impact on the ground

The survey showed that the majority of companies have been successful in implementing policies, rules and procedures to meet fraud and bribery challenges. These include training for staff, whistleblowing hotlines and codes of conduct. However, it showed there is still room for improvement.

Nearly two-thirds (60%) of those surveyed in the UK said their company has an anti-bribery or anti-corruption policy and code of conduct, but only 25% said they had seen their company take action against employees for breaching them.

But the biggest contrast between corporate policy and perceived reality on the ground was on whistleblowing. Nearly eight in 10 (79%) of UK respondents said their company had a whistleblowing hotline, but just 28% said management always followed up on whistleblower reports — below the EMEIA average of 32%.

Mr Smart 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.

“The whistle-blowing statistics are particularly alarming as employees are at their most vulnerable when they choose to uncover misdemeanours within their ranks. Failing to follow up on whistleblowing allegations can seriously erode trust in an organisation’s ability to tackle fraud and corruption.”

UK improving on overall anti-bribery and corruption

While there are differences between companies’ policies and reality, the national picture shows that the UK is performing well on anti-graft measures and practices. More than a quarter (27%) of UK respondents thought bribery and corrupt practice were widespread in their own country, but this was down from 37% in 2013 and compared to an average of 51% across EMEIA.

Regulation is also having a positive impact in some areas. Only 5% of UK respondents in this year’s survey said that offering personal gifts would be justified to help their business survive. This was down from 19% in EY’s survey in 2013.

Mr Smart added: “The UK appears to be ahead of other European states in its approach to confronting fraud and corruption. It is therefore important not to lose sight of the positive effect that legislation, such as the 2010 Bribery Act, is having in driving out explicit acts of bribery and other illicit practices.”

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