Deferred Prosecution Agreements: what are they and what do they mean?

Published on 3rd Jun 2016

The Deferred Prosecution Agreement (DPA) regime has now been in place for more than two years, although we have only recently seen the first DPA used.

When a business uncovers a potential offence within its organisation, it will typically have very little time in which to make difficult decisions and, in particular, whether self-reporting to the authorities may be necessary. Understanding whether a DPA might be an option and if so, what it might involve, can assist when it comes to making those initial tough decisions.

What is a DPA?

The Serious Fraud Office (SFO) and the Crown Prosecution Service (CPS) each have the power to agree a DPA, and have published a joint Code of Practice on how they intend to go about exercising that power.


  • are agreements between the prosecutor and an organisation who the prosecutor is considering prosecuting, for an offence of economic crime prescribed by the Crime and Courts Act 2013;
  • can only be entered into by organisations, not individuals;
  • allow organisations to avoid trials and convictions, but nevertheless be subject to penalties; and
  • are entirely voluntary – the prosecutor is not obliged to invite organisations to negotiate a DPA, and organisations are under no obligation to accept an invitation to do so.

Commencement of the DPA procedure

The Code of Practice sets out a two-stage test that must be applied by a prosecutor before DPA negotiations can be offered: the evidential test and the public interest test.

The evidential test requires either that:

  • there is sufficient evidence to provide a realistic prospect of conviction; or
  • there is at least “a reasonable suspicion based upon some admissible evidence that [the relevant organisation] has committed the offence” and reasonable grounds for believing that further investigation would produce admissible evidence, “so that all the evidence together would be capable of establishing a realistic prospect of conviction”.

The public interest test requires that “the public interest would be properly served by the prosecutor not prosecuting but instead entering into a DPA”.

How will a prosecutor decide whether to offer a DPA?

Whether to enter into DPA negotiations is entirely a matter of prosecutorial discretion. However, the more serious the offence, the more likely that public interest will weigh in favour of prosecution.

The Code of Practice sets out guidance to prosecutors as to how to determine whether a DPA should be offered, and lists a number of factors that should be considered.

Factors that favour a prosecution over a DPA include:

  • a history of similar conduct;
  • the conduct being part of established business practice;
  • the offence being committed at a time when the business had no, or an ineffective, compliance programme and had not significantly improved its programme since then;
  • failure to notify the wrongdoing within a reasonable time; and
  • a significant level of harm caused by the wrongdoing.

Factors that might weigh in favour of a DPA include:

  • co-operation;
  • lack of similar previous offending;
  • having a proactive compliance programme;
  • the offending being isolated and not recent; and
  • a conviction being likely to have a disproportionate effect.

What happens if a prosecutor decides to offer a DPA?

If a prosecutor decides to offer the opportunity to enter DPA negotiations, it will provide a statement of facts, giving particulars relating to each alleged offence and details of any financial gain or loss (if possible), and will attach key documents.

If negotiations proceed, both parties should give confidentiality undertakings, both as to the fact of the negotiations and as to the information that is disclosed during the negotiations. If the parties reach agreement, they will need to agree on a statement of facts, which will also need to be agreed by the court which will be published once the DPA is finally approved.

Court supervision

One of the distinguishing features of the DPA regime – as compared to the equivalent regime in the US for example – is that each DPA must be approved and supervised by the court. After negotiations have been commenced, but before terms are agreed, the prosecutor must apply to the Crown Court for a declaration that the entering into of the DPA is likely to be in the interests of justice, and that the terms are fair, reasonable and proportionate.

This application must be heard in private, and all subsequent hearings are likely to be held in private until the court formally approves the DPA at a hearing held in open court, at which point the prosecutor will publish full details of the DPA.

Content of a DPA

The terms of a DPA can include:

  • a financial order, which may include compensating victims; payment of a financial penalty; payment of the prosecutor’s costs; donations to charities which support victims; and disgorgement of profits;
  • payment of prosecution costs;
  • co-operation with investigators;
  • prohibition from certain activities;
  • financial reporting obligations;
  • a requirement to establish a robust compliance and/or monitoring programme; and
  • co-operation with sector-wide investigations.

Osborne Clarke comment

The DPA regime has only been utilised once to date, in the case of Standard Bank, which we discussed in an earlier article (here).

That case, which involved an offence of failing to prevent bribery contrary to section 7 Bribery Act 2010, was followed by the prosecution of Sweett Group plc for the same offence (see our article here). Sweett was unable to satisfy the SFO that it merited a DPA and, in particular, that it had self-reported promptly and given full co-operation to the SFO thereafter.

Although Sweett was prosecuted and convicted, the penalty imposed on Sweett did not appear, relative to the amounts involved in each case, to be a materially heavier penalty than that imposed on Standard Bank in the DPA.

Whilst the DPA regime is still new in practice, there is understandable concern that the process, and in particular its timescale, remains largely uncertain. If, added to those concerns, there is scepticism as to whether self-reporting will lead to clear benefit in terms of any sanction imposed, prosecutors may yet find companies unwilling to approach the SFO. They may ask, if they have closed matters down internally, what is the realistic risk of detection by the authorities?

A decision to self-report will often be complex and finely balanced. The authorities will expect almost unconditional co-operation not least in providing evidence, which may be subject to legal privilege and will therefore involve a waiver of that privilege, which may then be used to prosecute company employees.

The waters that lead to a decision to self-report will often be choppy. Understanding the issues that are likely to be involved, having in place a strategy to act on any issues that may be identified, and obtaining advice early on can help you to navigate those waters successfully.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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