Abstract

The purpose of this article is to examine two emergent trends in the supervision of banks in the United Kingdom.1 The first trend concerns the use of statutory law in the supervisory process, and the second the role played by bank auditors in that process. It will be argued that, historically speaking, the Bank of England2 developed a flexible and co-operative3 approach to bank supervision. Recently, however, attempts have been made at building statutory foundations into this process of supervision, and bank auditors have been drawn into the supervisory process. In turn, these developments prompt the two questions which are considered in this article. First, what are the consequences for the law of its instrumentalisation by government in the sphere of bank supervision? Second, what are the implications for the audit function of the bank auditor's evolving supervisory responsibilities? In answering these questions, frequent reference will be made to the scandal surrounding the collapse of the Bank of Credit and Commerce International which in recent years has done so much to highlight the Government's responsibility for bank supervision. It is a truism that the UK Government habitually resorts to legislation to further its policy objectives.4 Given the pre-eminent position of the Government in the law-making process, this is not surprising. Daintith, however, has observed that 'many lawyers still react with unease or even distaste when invited to view law as an instrument of policy, and even those who find nothing strange about the notion will readily admit that the relationship between law and policy remains a problematic one.'5 The claim frequently made is that the instrumentalisation of law by national governments for policy purposes has precipitated a transformation

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