Wining and dining: the rules on client hospitality


Client hospitality{{}}

Taking a valued customer out for a three-course lunch or sending a client a bottle of champagne as a thank you gift can help to grease the wheels when it comes to maintaining a good working relationship. But businesses should be aware of rules under the Bribery Act when it comes to wining and dining clients

Good customer care can be particularly vital in small firms, whose reputation often depends on a personal touch and good customer service skills. However, under the Bribery Act 2010, businesses must ensure that client hospitality is “proportionate” - or risk prosecution.

The lawyer’s view on the Bribery Act

“Business owners don’t need to worry, provided their corporate hospitality is proportionate and reasonable for the size and type of their business,” says Susan Barrington-Binns, head of the construction department at Shulmans solicitors.

“The Bribery Act isn't there to stop or thwart legitimate business interest or put an end to genuine hospitality. For example, you can still pay for reasonable travel expenses for clients or take them to Wimbledon or out to lunch - provided it’s proportionate for your firm.

“But small firms should carry out a risk assessment for bribery and put in place anti-bribery procedures. They don’t have to get a law firm in to do it - they can do it themselves."

You need to be able to demonstrate you've done all that could be reasonably expected to prevent or detect bribery. So what’s reasonable for a firm with a handful of employees? Talk to staff or email information around about the Bribery Act, to ensure that everyone understands the rules.

Small firms should also have a threshold on expenses and have checks in place to ensure that directors and staff stick to them, so that employees aren’t coming back with disproportionately expensive lunch or dinner receipts.

"Clearly, if corporate hospitality is just used as a means to an end to cover bribing someone, such as to pay for someone’s holiday or to have a meeting in a luxurious location, then that wouldn't be proportionate," advises Barrington-Binns.

The small business view

"I don’t believe in taking clients out for a meal to pitch to them - it has to be part of the client contact policy, focused on relationship building, not winning business," says Claire Curzon, managing director of business services firm Brighter Directions.

“We do pay for clients' refreshments. As in personal situations, if you invite someone for a meal or drink then you pay for it - it’s just normal etiquette.

"We do have a company policy for corporate hospitality under the Bribery Act - although it is only senior managers who meet clients, and they are experienced enough to know good manners.

"There is so much red tape for small firms, it obstructs how businesses manage their client relationship roles, which shouldn't be the case. With so many other regulations on small businesses, it’s difficult to ensure we are in line with legislation and policies but also deliver a fantastic customer service, which vitally is what drives a business forward.”

"We use gifts to show our appreciation to important clients. We bought one a magnum of vodka which came with its own ice bucket - it was a £200 gift, and he loved it. But it could be a grey area in terms of the Bribery Act," says Roger Garcha, managing director of BetterTAX.

“I think we are low risk, but we reviewed our client hospitality as a result of the Act and looked at how we reward our agents and bigger clients."

Gilbert Hill, owner of web development firm Governor Technology says, "I regularly meet clients for lunch, dinner, drinks after work or the odd sporting event, based on what they are interested in.

"I'm looking to get into a position of trusted adviser with my clients, and as such many clients become personal friends. If I’m taking a client out to lunch, I’ll actively not make it about who they can put me in touch with or what opportunities they have for me.

"I’m not spending huge amounts on the clients as that’s not what it's about - it’s about building a relationship with them."