As we move tentatively out of the shadow of Covid-19, being mindful that a second wave or local lockdowns could still happen, what lessons can we take forward to ensure investigation work continues in an unpredictable environment?
We know that, despite the operational challenges of working in a remote environment, the regulatory obligations on firms have not changed. The Financial Conduct Authority (FCA) still expects firms to act within a reasonable timeframe to identify risks and/or potential misconduct. Indeed, firms are facing an increased risk of employee misconduct as a result of the remote working arrangements. This is not to forget those investigations which were already on foot and have been paused or delayed due to the challenges of the pandemic.
Whilst many firms in March/April, as the realities of a complete lockdown became apparent, were considering delaying existing or potential investigations until the circumstances returned to normal, the outlook now is very different. Whilst some firms are back in the office, a substantial proportion of firms will see many employees, including its legal and compliance teams, working remotely into 2021. It is therefore not practical or advisable to pause investigations in the medium term as this could lead to increased litigation and regulatory risks.
We have learnt a great deal from the last few months and there are several ways to mitigate the risks and potential challenges of carrying out investigations remotely. We share some of this experience below.
Decision to proceed or postpone
- There are significant risks inherent in deciding to postpone an investigation. Memories fade, document identification and retention can become more difficult and there may be increased litigation, regulatory and reputational risks in postponing action. Having said that, some matters may not be time sensitive. Firms should adopt a risk based approach and document their decision, taking into consideration any particular difficulties the remote environment poses in relation to the subject matter of the investigation and whether postponing will impact the integrity of the investigation. For example, are relevant employees currently on furlough or is there a possibility that they will leave the business? There is no one size fits all approach and firms should consider each investigation on a case by case basis.
- Is it reasonable to adapt your usual investigations “playbook” to take into account the remote environment? Firms should carefully consider how they scope investigations and look to narrow the focus as much as possible, in ways they may not have done previously. If a regulator has specific questions or concerns, a firm can and should discuss the scope of those concerns and where possible seek to narrow the investigation scope. We are seeing regulators being open to these discussions. Firms can also consider changing the usual sequencing of investigation stages, for example, by interviewing witnesses before a document review has been completed. This could establish whether and where there are relevant issues to investigate more quickly.Fuller interviews in light of the documents can be conducted at a later stage.
Document preservation and retrieval
- This aspect of the investigation may prove more difficult in a remote working environment. Centrally stored data should not pose difficulties but employees may be holding hard copy documents or documents stored on local drives that are now more difficult to retrieve if they are working offsite. Third party hardware is available that can be posted to employees for them to manually upload their data.
- Firms may be reliant on third party storage facilities. Investigation teams should contact those third parties to ensure they are able to adhere to their retrieval service level agreements.
- Firms may want to reissue document preservation orders to ensure employees are aware of their ongoing obligations.
- The document review process has in practice been undertaken remotely for some time, although some document review teams may not be able to share one location, something we discuss below.
Subject or witness interviews form a key aspect of most investigations, particularly if the investigation needs to consider the credibility of a subject or to test differing accounts of a situation. This activity, however, potentially poses the greatest challenge/risk in a remote environment. Video conferencing or telephone conferencing is widely available and accessible but it is undoubtedly more difficult to build rapport with a subject over video conference. It is also more difficult to evaluate the soft cues given by an interviewee such as demeanour, hand gestures and body posture.
Other considerations include:
- Interview logistics and etiquette. We recommend testing the technology and allowing more time to complete interviews to take into account technical difficulties and running through the etiquette for remote interviews.
- Interviewees’ environment. We advise considering the environment in which the subject will be participating in the interview to ensure confidentiality and privacy. The interviewing team should specifically remind the subject of their confidentiality obligations and ensure there is no-one else present with the interviewee (other than agreed parties). Firms should risk assess each interview as there may be some limited cases where the subject matter is so sensitive that a remote interview may not be appropriate and where a neutral environment may be preferable. See our comments below.
- Interviewees would usually be provided with a document bundle at interview. Firms should consider how this is provided to the interviewee to ensure confidentiality. Some video conferencing facilities allow screen sharing, or, depending on the sensitivity of the documents, it may be appropriate to provide an electronic read only bundle which is password protected, such password to be conveyed at the commencement of the interview and which is deactivated immediately afterwards. Some documents may simply be too sensitive to share in a remote environment and the interview strategy will need to be adapted to take this into account.
- Firms will want to ensure an accurate note of the interview is captured. Most video conferencing facilities offer direct recording.
Some regulators are now considering re-starting in person interviews. Each face to face interview should be subject to individual risk assessment with consideration given to the interview environment as well as the individual circumstances of each person attending. Firms may wish to choose a neutral venue which is easily accessible by all parties.
Internal communications and reporting
- Investigations can be fast moving and include a large amount of document review, necessitating a large team of investigators. It is important for the investigation team and any outsourced resource to maintain regular contact to share information and views. It is always good practice to keep a decision log in relation to important milestones in the investigation but this becomes even more critical in a remote working environment.
- A separate channel of communication should be set up during longer interviews to allow the investigation team to discuss the interview, where team members are not in the same location.
- Consideration should be given to how investigation findings are reported to senior decision makers and stakeholders. For example, can interim findings be delivered efficiently via video conference?
Implementing investigations findings
- Depending on the nature of the investigation, should there be numerous investigation findings and recommendations for changes to policies and procedures, potential remediation etc, consider could be given as to whether these steps can be implemented on a staged basis to alleviate the resource difficulties remote working may present. Again, a risk based model should be utilised to consider if this is appropriate in the specific circumstance of the investigation and the rationale for any decision documented should those decisions be challenged at a later date.
The pandemic situation has accelerated technological change and attitudes along with our ability to carry out investigations remotely in an effective way. As we move back to an environment where we can carry out face to face interviews and meetings, we can utilise the lessons learnt to provide a more agile and adaptable investigations model. Firms now have more options open to them in the investigation process, as long as appropriate steps are taken to mitigate the risks and pitfalls discussed above.