Howard Catherall, partner at Leathes Prior and head of regulatory and criminal defence, explains why the fourth industrial revolution means there will be a need for specialist legal advice and representation as new regulations are imposed on areas of innovation.
Established 145 years ago, Leathes Prior Solicitors is a full-service law firm providing a comprehensive range of client legal services across East Anglia and beyond. The leading law firm appointed Howard Catherall as head of the Regulatory and Criminal Defence team on April 1, 2021.
Howard, who is from Wymondham, is a member of the Chartered Institute of Logistics and Transport and has been inducted into the Legal 500 Hall of Fame for transport and shipping in East Anglia. His specialism in the logistics and supply chain sector focuses on regulatory compliance, which has become ever more important as the industry adapts to a period of intense innovation and consequent scrutiny.
“We are in the early stages of a fourth industrial revolution, which brings with it a considerable amount of upheaval,” Howard says. “Government publications make clear that regulations will be introduced to reflect innovative areas of work, which means businesses may require advice on joining new regulatory schemes or how to adapt their systems to ensure they remain compliant.”
Changes to existing regulatory schemes mean businesses might find themselves at risk of breaching regulations – whether inadvertently or negligently.
“At Leathes Prior, we seek to alleviate the burden of having to deal with a regulator,” Howard says. “I act for businesses and organisations on a broad range of matters, from advising on applications for regulatory approval to representing those facing investigation for a regulatory breach and the prospect of prosecution. I’m currently dealing with a number of inquiries and investigations in sectors such as care, farming, estate agency and fulfilment houses.”
Fulfilment house sector
The fulfilment house sector, which concerns warehouse operators that store goods on behalf of e-commerce traders, is a good example of how innovation in the retail sector has led to regulatory upheaval.
“If you purchase something from Amazon or eBay, the likelihood is that you are buying from a trader who may be based in China, for example, but the goods are actually being stored in the UK and will be with you within 24 hours,” Howard explains.
“HMRC identified that there was a huge import VAT and customs duty black hole, which had been created in large part by misdeclaration of goods on import. So in 2019 HMRC introduced a regulatory system for the fulfilment sector called the Fulfilment House Due Diligence Scheme (FHDDS) with the intention of imposing discipline in the system and plugging the black hole.”
This means that fulfilment businesses will fall foul of the regulatory framework unless they obtain HMRC’s approval to operate and then remain compliant.
Howard has assisted large fulfilment house operators with their applications and ongoing compliance with the FHDDS. He also advised the UK Warehousing Association during the consultation process and attended the stakeholder meeting alongside its chief executive. With this experience, Howard and his team are well placed to provide advice, reassurance and representation to those in the fulfilment house sector as they are scrutinised by HMRC.
Brexit
Brexit has caused further disruption by adding complications into the regulatory system, particularly with regard to product safety.
The CE marking required for goods sold in the European Economic Area (EEA) affirms conformity with European safety laws and standards. However, the new UK Conformity Assessed (UKCA) product marking was introduced on January 1, 2021 for goods being placed on the market in Great Britain.
“Before Brexit, CE marks provided reassurance that a product was compliant and safe,” Howard says. “Now we also have the UKCA mark, but during the current product safety transition period, extended to 1 January 2023, you’ll find both being used. There are different regulations which apply to different product types. If you are a distributor trying to work out if the products you store are compliant, it’s a nightmare.
“And the Northern Ireland protocol has only created further complications for those operating in the supply chain.”
Here to help
The team at Leathes Prior is experienced in providing advice and representation across the regulatory field – whether in an advisory capacity or when things become more contentious.
“Engaging with a regulator doesn’t automatically mean that things have to be confrontational,” Howard says. “My initial approach is generally to advise clients to take a step back and to seek a solution which de-escalates matters. Establishing and maintaining a positive and constructive relationship with a regulator is better for your business than an ongoing battle.
“The Regulators’ Code is always a helpful starting point as it essentially reminds all concerned that, even where fault is found, help should be given to those who seek assistance and who genuinely want to get back on track. If we can help a client avoid court, so much the better.”
For more information, please call 01603 610911 or visit www.leathesprior.co.uk
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