The British Horseracing Authority has released an 83-page review into the practices of the bloodstock industry, which contains a number of recommendations about how things could be improved. Having been commissioned more than two years ago, the report was much-anticipated and has to the bloodstock industry declaring itself ready to ‘adapt and change’.
Whilst the report was scathing of certain aspects of the industry that oversees the buying and selling of bloodstock and horses in the UK, it was also quick to draw attention to the fact that it was a small number of ‘bad apples’ that were giving a bad reputation to others. In general, though, the report was filled with recommendations that aim to help reform the sector.
Why Was The Review Commissioned In The First Place?
In June of 2017 the British Horseracing Authority decided to commission a review into the world of the bloodstock industry. The BHA’s Chief Executive, Nick Rust, wrote in his foreword to the report that the decision to do so was based upon concerns about the ‘perception of unethical practices and experiences’ as well as the ‘number of clear vulnerabilities’ that had been brought to the BHA’s attention.
Justin Felice, who was once the Chief Superintendent for Lancashire Police as well as numerous other important roles within the police, was appointed to lead the report from March 2018. The people in charge of producing the review interviewed in excess of 70 people from across the industry before releasing an interim report in September of last year. It was then shown in full to the BHA’s board in July of this year, with leaks then making it into the press in August.
The Key Findings Of The Report
At 83 pages in length it’s fair to say that the review into the buying and selling of horses and bloodstock is pretty close to comprehensive. The result of that is that it’s far too big to look at every aspect of it in detail here, but we can draw attention to certain key findings. Led by former police officer Justin Felice, he made eight suggestions that could transform the way that the industry works.
Those suggestions were based on the two years or so worth of research carried about he and his team. Amongst there findings was the fact that the ‘self-regulating’ that was done in accordance with the Bloodstock Industry Code of Practice from 2009 was barely being done, with many ‘Agents’ breaching the code on a regular basis. The general consensus was that around 5% of Agents were ‘bad apples’, but the rest ‘conducted themselves with integrity’.
Perhaps the most worrying finding from the BHA’s point of view came with point 13 of the review, which said:
“Many of these breaches constitute not only breaches of the Code, but also breaches of related agent/fiduciary legal duties, and in some cases potentially breaches of applicable criminal legislation (including one or more of the Bribery Act 2010, the Fraud Act 2006 and the Criminal Law Act 1977) and the tort of unlawful means conspiracy.”
Unethical & Unlawful Practices
These unethical and unlawful practices that the review refers to will be a concern for the British Horseracing Authority, with Agents being the ones highlighted as being problems most commonly. The main areas the BHA will need to watch out for are as follows:
- Secret Profiteering – Often involving collusion between the likes of the Agent for the purchaser and the vendor.
- Dual Representation / Commission – Agents would represent both the buyer and the seller without the other’s knowledge, therefore taking commission from both.
- Luck Money – Agents would demand and then receive money for the sale of a horse.
- Bidding Up – The practice of bidding up to an agreed amount by people who don’t actually want to buy the horse with the aim of increasing the price that the eventual purchaser has to pay.
What Can Be Done?
Knowing that the industry is rife with problems is one thing, but doing something about them is entirely different. The review refers to the ‘pressing need to change and modernise the culture of the bloodstock industry’, with the hope being that to do so would stop such unlawful conduct becoming ‘normalised’. The problem, however, is that people within the industry are afraid to report any wrongdoing in case they’re then ostracised for doing so. This was backed up by the fact that no complaints have been registered since 2004.
With the self-regulatory model ‘not fit for purpose’ and a ‘lack of integrity in the bloodstock industry’, it’s clear that changes are needed. One suggestion made by Felice and his team was that the BHA should take over as the regulating body for the industry, whilst another recommendation was the formation of a body that industry representatives could communicate with each via, leading to the creation of the Bloodstock Industry Forum earlier this year.
BIF was formed with representatives of the following groups:
- The Federation of Bloodstock Agents
- The National Trainers Federation
- The Racehorse Owners Association
- The Thoroughbred Breeders’ Association
- The Breeze Up Consignors Association
- The BHA
Licensing Bloodstock Agents
Perhaps one of the key suggestions from the review is the licensing of bloodstock agents in order to limit the potential influence of the ‘bad apples’ that have given the industry such a bad reputation. The hope of the BHA is that anyone acting as an unlicensed agent would then have to face sanctions or even exclusion from the industry as a whole. The Federation of Bloodstock Agents wasn’t convinced that the idea would definitely work, however.
The FBA’s representative, Oliver St Lawrence, said, “it was recognised by all, including the BHA, that the licensing of ‘agents’ in the broadest sense of the word was extremely challenging both logistically and in terms of the international norms applying to buyer participation at bloodstock sales…Nevertheless, the FBA is determined to put in place more rigorous requirements surrounding our membership, including an ‘integrity course’ for all and to establishing membership of the FBA as a recognised and sought after ‘kitemark’ of personal and corporate integrity”.
What It Means For Horse Racing
The reality is that the publication of the report means very little for the average racing fan. Unless you are heavily immersed in the importance of bloodstock trading you’re unlikely to give the review more than a passing glance. Yet for those in the industry it is a big deal, putting forward the suggestion that there is ‘clear and compelling evidence of widespread instances of breaches of agency and fiduciary duties’ within the world of bloodstock trading. It will lead to a new Code Of Practice, which will take time to implement.
Obviously the big question for the bloodstock trading industry is whether or not it’s truly willing to implement the changes that the British Horseracing Authority’s review has recommended. The reality is that the report spoke of issues that were ‘ingrained’ in the way it works, so getting rid of these is easier said than done. That the complaints procedure is likely to be ‘independent of the industry bodies’ is likely to be a big help in that regard. It will also be helped by the Racehorse Owners’ Association saying that ‘the protection of owners is paramount’.