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Risk is central to the FSA’s future regulatory approach

Male looking at microscope

New research has identified that food safety is not a high risk priority for many drink company Boards. This will have to change as the Food Standards Agency focuses more on the risk companies pose in its new regulatory approach, argues Stephen Whyte.

The regulation of food safety across the UK is set to undergo radical transformation to a more risk-based system over the next few years as part of changes planned by the Food Standards Agency (FSA) under its Regulating Our Future (ROF) programme.

It will also be affected by the UK’s new relationship with the EU’s regulatory authorities, as a result of Brexit, which is scheduled to take place on March 29 2019, and whose full impact is yet to emerge. The transition period may ease things, but change is inevitable.

Much of ROF’s detail is still being worked out and a new consultation on Food Law Code of Practice (Code) for England has was announced by the FSA on 5 July, which calls for stakeholders’ views on the proposed amendments. The closing date for comments is 27 September 2018.

This review proposes to change the process of food business registration; make changes to the application of the Food Establishment Intervention Rating Scheme (FEIRS); recognise national inspection strategies; and, lastly, obtain early views from stakeholders on other co-dependent aspects still in development.

The proposed changes will enable a new digital approach to the process of registration for new businesses. They will enable the targeting of resources to maximise the impact on non-compliant businesses through amendments to the Food Establishment Intervention Rating Scheme; and they will recognise national inspection strategies, creating better alignment between the Code and Primary Authority, according to the FSA.

What eventually emerges from ROF early next year will be impacted to some extent by whatever transition deal the UK government secures with the EU. Many uncertainties remain, not least what border controls will be in place on foodstuffs and the FSA’s relationship with risk assessment bodies, such as the European Food Safety Authority (EFSA) and access to the EU’s Rapid Alert System for Food and Feed (RASFF).

The government also wants to transfer more of the cost of regulation onto businesses themselves. Even though the FSA recognises that these costs should be ‘no more than they need to be’, it will inevitably mean increased costs for food business operators through some form of cost recovery model.

If that were not enough to contend with, new research from my company QADEX has painted a worrying picture about the importance placed by company Boards on food safety as a business risk. With all the changes in prospect, and with greater expectations being placed upon them, many more food and drink businesses would be advised to consider the food safety risks they face.

At its Board meeting held in York on 20 June, the FSA’s director of regulatory delivery Nina Purcell presented a paper describing progress on ROF, which aims to modernise how food businesses in England, Wales and Northern Ireland are regulated to check that our food is safe and what it says it is.

The plan is to make regulation more fit for purpose than it is now, using private sector third-party food safety audits to help the FSA and local authorities (LAs) target their increasingly limited resources. As well as relying more heavily on industry data and intelligence, it will also draw upon the latest technologies in the form of ‘big data’ analysis and the use of blockchain, a form of secure supply chain traceability. The FSA reported a successful cattle abattoir blockchain trial at the beginning of July.

Regulatory concern

However, during discussions at the FSA’s June Board meeting, it was clear that there is still some concern about the food and drink industry’s willingness to collaborate with regulators more closely. There is also hesitancy in some quarters about future reliance on third-party hygiene audits, given recent high-profile incidents involving firms that had previously received approval after private sector third-party audits.

Board member Stewart Houston, a pig farmer and former chairman of the British Pig Executive, in particular, questioned whether third-party hygiene audits were sufficiently robust for the FSA to rely on them under ROF. It was a view shared by others on the Board. Purcell replied that the FSA was carrying out a “big slug of work” to make clear what standards from private sector third-party audits it would take into account in its evaluation of the risk companies pose. “This is the most important part of the model that we will need to get right,” she said.

Ian McWatt, director of operations at Food Standards Scotland (FSS), who jointly presented the interim review of meat cutting plants and cold stores with the FSA at the Board meeting, explained that, while third-party assurance had an important part to play, more work needed to be done given the incidents that had arisen in meat plants over the past year.

The FSA’s head of operations assurance, Simon Dawson, remarked that following the non-compliance incidents identified last year, it was clear from the review, that third-party assurance schemes didn’t cover the basics of food hygiene standards sufficiently, partly because they had to include details on product quality.

“The issue quite often is just being able to extract that information that is relevant to the particular issues of food safety and hygiene,” said Dawson. “That’s been largely the challenge thus far … and we just haven’t historically asked basic questions when we’ve conducted assurance activity as the regulator about whether a business in this sector [meat] is a member of an assurance scheme or a retailer scheme.”

Dawson also expressed interest in the British Retail Consortium including food safety management culture of businesses as a component of the new version of its Global Standard for Food and Drink. “We have been discussing how we might exploit that and work with assurance schemes to use that information as part of our assurance framework as well,” he said.

Since ROF will draw upon the work currently underway in the food sector to improve food safety cultures within organisations, it is worrying that from the QADEX survey, there appears to be a disconnect between perception of food safety risk between those technical specialists at the cutting edge of ensuring high levels of food hygiene and the Boards of food and drink companies.

QADEX survey

QADEX researchers segmented the food and drink market into three tiers: those businesses with turnover in excess of £250 million, those in the £100-£250 million bracket, and those with turnover between £20-£100 million.

From each tier they randomly selected 50 firms, giving a sample of 150 in all. They accessed each one’s published accounts, lodged with Companies House and accessible on the organisation’s website. They then noted the specific risks highlighted in every enterprise’s Risks and Uncertainties statement, after which the results were collated.

The overall results confirmed our suspicions: of the 29 risk factors, product safety barely scraped into the top 10, with only one-in-six firms (17%) citing it in their statements. Within the £20-£100 million turnover tier, the figure plummeted to one-in-10 (10%). This contrasted sharply with the largest companies, of which almost one-in-four recognised product safety as a concern.

When it came to regulatory and reputational risk, overall interest was even lower. Combined results across all three tiers revealed just one-in-20 firms (5%) registered protecting reputation as significant. Associated issues that influence brand standing – sustainability and ethical risk – went unmentioned by 97% and 98% of the sample respectively.

While the QADEX Food Safety Audit highlights the need for food and drink businesses to give greater consideration to food safety risk in their financial reporting, we are hopeful that our research will also attract increased Board-level support for food safety teams that are often under-resourced with shrinking budgets.

We now plan to publish the audit on an annual basis, in order to measure and track the sector’s performance over time, to help promote and support best practice.

This will complement new research planned by the FSA as part of ROF to evaluate how its proposed risk measurement approach or ‘risk engine’ will perform in practice in developing a risk score for different food businesses. The FSA projects will explore, for example, whether compliance performance in other regulatory areas correlates with food safety compliance, and what the impact of culture within a business has on food safety compliance.

The FSA’s chief executive, Jason Feeney, remarked that both he and the FSA chairman, Heather Hancock, had recently been calling for behaviour change within food and drink businesses to help the regulator carry out its role better.

“We have been advocating strongly the need for responsible businesses to play their part in terms of providing intelligence and information that allows us to perform and target our activities better. It’s a pattern of behaviour that we find incidents and take corrective action only to be told that this was widely known before it happened and it was not a question of if it happened but when it happened.”

Feeney added: “The industry needs to increasingly understand and accept the fact that the reputational damage is a collective damage to the industry and that consumers’ trust is not limited to one particular company.”

Biography: Stephen Whyte

After a childhood of climbing trees and milking cows on an Irish farm, Stephen studied business, followed by a career as Finance Director in the food industry with Kerry Foods and Samworth Brothers. Stephen left the finance dark side, and founded QADEX to develop innovative solutions for food safety teams to break the endless spiral of manual systems, mountains of paperwork and firefighting.

With encouragement from over 16,000 engaged customers, QADEX has grown steadily to provide a range of scalable and configurable modules covering food safety and new product development (NPD), such as supply chain mapping, risk assessments, supplier and product approval, QA/QC checks, customer complaints and the herding of cats necessary to deliver successful NPD launches.

In his free time Stephen can be found farming, at his son’s rugby matches or figuring out how to get to another Bruce Springsteen concert.

Website: http://www.qadex.com/ 



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