The Compliance Conundrum

The straight jacket of compliance remains an uncomfortable factor for the global VIP hospitality industry which generates more than 6 billion Euros a year. Domestic legislation in different countries needs to be carefully understood as it determines what is and more importantly, what is not acceptable and even when the rules are down in black and white it can still be a headache. As Mike Mainwaring, the London based head of sponsorship at Quilter, explained:The Financial Conduct Authority (FCA) came in with more teeth and their positioning is that they have put guidance in place but there are no hard and fast rules about what is acceptable. It is a bit like driving your car and speedometer doesn’t work and there are no sign posts.

“You could be thinking it is a 30mph area and you are guessing you are within the speed limit without really knowing. We can’t go to the FCA and say, 'this is that standard we are working to, is this OK?' It’s only when they ask questions and a report has to be produced that you could be told something is inappropriate.”

Patently, there has never been a greater need for businesses to invest in a centralised purchasing process that can help alleviate the compliance burden.

Since 2008 when increased scrutiny was applied to compliance in the hospitality market there have been challenging times and while what many in the industry saw as hysteria has, to an extent, mellowed what remains is still a major issue. The ongoing battle to find an easier way to deal with compliance, particularly in the City of London, is shaping company attitudes to accepting and arranging hospitality. Mainwaring, whose company are major backers of England’s rugby internationals at Twickenham, said:

“Has it (compliance) become simpler? No, it’s still very difficult and it is slightly industry dependent but if you are looking at financial services or professional services it is pretty carefully examined.

If the rationale is about building relationships and understanding your customers better then where is the best place to hold that conversation? I think risk appetite is fairly conservative at the moment and in the financial services industry where the question of compliance is taken very seriously, people are following the regulations that are in place.”

Giles Morgan, who was global head of sponsorship and events at HSBC for 12 years, is uniquely qualified to address the issues involved. He said: “One of problems is that companies have different thresholds. They have to be very clear about why they are involved in corporate hospitality because compliance is very murky.

“When the UK Government wrote the Bribery Act it was designed to make everyone Holier than thou without actually telling companies what they could do. You had to create your own rules. Inevitably, everyone panicked and common sense was lost in the knee jerk reaction. I don’t think there has been a change in attitude since that point and people are still finding it hard to justify hospitality under their own company rules. Unfortunately, there is also this “Austerity Britain” attitude and you can’t have fun. The prawn sandwich brigade gets it in the neck, but my response is “who is paying for the sport?

Besides the UK, America, Germany, France and Asia are also hot on compliance and where it is a good thing is that it has forced companies to do it properly. “
Chel Roux at Wimbledon posing with guest
The Championship, Wimbledon

Great sporting events must also evolve to maintain their attraction and place on the “bucket list” of spectacular days out to be ticked off by clients. The Championships staged at the All England Lawn Tennis Club in Wimbledon remains an iconic venue and major upgrading of facilities has been achieved without a single day of the greatest tennis event on the planet being lost to the work.

Corporate table cheering at London Bierfest
London Bierfest

Mick Desmond, commercial and media director All England Lawn Tennis Club (AELTC) has seen a significant shift away from large corporations to smaller groups and increased overseas attendance. He said: “Everybody knows that Wimbledon is a sold-out event with all the hospitality and tickets through the ballot and debentures have gone before the Championships start and therefore, from an individual perspective taking their partner, some friends or clients it is on a lot of people’s bucket lists. We are finding more and more international visitors are coming via our hospitality, a lot of Americans and Chinese and that has come about following our decision to grow our brand globally. Our website and apps during the Championships communicate how people can come to Wimbledon. There is an increasing international aspect to our corporate hospitality and also some shift in terms of companies not taking the same number of hospitality packages and being replaced by individuals and small groups.”

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An award-winning, UK-based sports writer who has covered international rugby & tennis for more than 30 years. He has written for every major British newspaper and has extensive TV & radio experience.
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