Comply with business regulations

A company of any size dealing with customers and sales data is subject to government regulations. Understanding all these regulations can be daunting. However the cost of non-compliance is more worrying; from fines to legal battles and lost customers.

Josh Claman, vice president and general manager for Dell in the UK and Ireland, talks you though some of the main regulations currently in force:

The Data Protection Act 1998

This is the main data compliance legislation affecting small businesses. Under this act, any organisation that processes personal data about people must notify the Information Commissioner’s Office (ICO). 

If you have, for example, marketing and sales databases and/or CCTV camera use or phone logging data, you will need to register as failing to do so is a criminal offence. The main purpose of this law is to promote openness in the use of personal information.

Only information about individuals which is held on computer or in certain circumstances on paper and sorted by reference to individuals is subject to the Act. If you are uncertain, contact the ICO.

http://www.ico.gov.uk

Privacy and Electronic Communications Regulations 2003

This regulation contains, among others, two important rules for email marketing. The first rule applies to all marketing messages sent by electronic mail, regardless of who the recipient is. 

The sender must not conceal their identity and must provide a valid address for any opt-out requests. The second rule states that it is illegal to send unsolicited marketing messages via electronic mail unless you have the recipient’s prior consent to do so or certain other criteria are satisfied.

This law is of particular importance for small businesses as email marketing is a quick, cost-effective way to target prospects. If you cannot get consent from the receiver, look to sending them information via post instead. 

http://www.ico.gov.uk

Basel II Capital Accord (Basel II)

Basel II is an international agreement that sets bank supervision, risk-based capital, and disclosure agreements for banks operating internationally. Basel II is an important issue for small businesses and small banks as it affects bank behaviour and their willingness to lend to small businesses.

To estimate the risk of their client firms, banks need more information than before. Small businesses that show they are stable can expect to benefit with lower interest rates and better access to loans. Small businesses deemed high risk are likely to face higher interest rates and collateral requirements.

http://ec.europa.eu/enterprise/entrepreneurship/financing/basel_2.htm

The Money Laundering Regulations 2003

This legislation affects businesses mainly in regulated industries (e.g. accountants, lawyers, estate agents, casino operators) and those businesses that accept £10,415 or more in payment for goods (e.g. auctioneers, art, jewellery or car dealers).

These businesses must appoint an in-house money-laundering officer, ensure their staff are adequately trained in anti-money laundering techniques and introduce strict customer identification procedures. 

They are also obliged to report any suspicious activity to the National Criminal Intelligence Service regardless of the amount of money involved. 

Businesses that do not fall into these two areas have no obligation under the law to train its staff in money laundering procedures or to take any other form of compliance action. 

http://www.hmrc.gov.uk/

The Companies Act 2004

This act helps protect the UK against Enron-style corporate scandals. It strengthens the independent regulation of the audit profession and the enforcement of company accounting requirements.

It gives auditors greater powers to get the information they need from a business to do a proper job, and increases company investigators' powers to uncover misconduct.

Small businesses are exempted from many of the requirements of this law however it is best to check with either your accountant and/or the BERR to ensure you are complying as required.

http://www.berr.gov.uk

Sarbanes-Oxley Act of 2002

Commonly known as SOX, this act is from United States federal law and has global implications. It aims to protect investors from the possibility of fraudulent accounting activities by corporations. 

Any UK company listed on recognised US stock exchanges must comply with SOX, as must UK subsidiaries with listed parent companies. As a small, independent business in the UK, you may not be legally required to comply with the Act.  However, if you have customers that are required to comply, they in turn may need you to be compliant due to their reporting and accounting requirements.

http://www.sarbanes-oxley.com/

Adhering to compliance can be confusing and time-consuming.  Ensure you understand core compliance requirements and always seek help from qualified accountants and lawyers.

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By Josh Claman  on   Jul 07,2008

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Keywords

business regulations    employment law    acconting standards   

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