The Policing of Commercial Malpractice — Public Law or Self‐Regulation

Abstract

Whilst the criminal justice system has evolved over the last seven years, it can be argued that the ability of the current criminal justice system in England and Wales to deal with the investigation, prosecution and trial of serious and complex fraud can still be challenged. Using material gathered whilst undertaking research for the Diploma in Compliance Studies at Exeter University, this paper makes a number of recommendations in this context. The existence of civil remedies and the regulatory structure created under the Financial Services Act 1986 may offer a limited opportunity to deal with some categories of commercial malpractice in an expedient and cost‐effective manner, outside the scope of the criminal justice system. This paper derives from research carried out with the purpose of reviewing the investigation, prosecution and trial of serious fraud in England and Wales in order to assess whether commercial malpractice is in fact a proper subject for ‘public law’, or whether it could be more effectively and expediently dealt with through civil law remedies, or by the self‐regulatory agencies created under the Financial Services Act 1986. This paper represents a summary of the main findings and interpretations of that research, which included interviews with three experts in the field. In considering this issue, one is bound in two ways. If one concludes that the criminal justice system can offer an effective and efficient method of the disposal of commercial fraud, the arguments for and against the use of the regulatory system become commensurably less significant. If, however, the conclusions suggest that major legislative and procedural changes are required to facilitate the effective and efficient prosecution of commercial fraud, the scope for use of regulatory sanctions where appropriate takes on a greater significance. Thus there are two elements in the writer's conclusion. First, there was concern to assess the veracity of the conclusions drawn by the Fraud Trials Committee in 1986 to the present, and other problems faced by the criminal justice system in the investigation, prosecution and trial of commercial fraud. Secondly, it was important to consider arguments for and against the use of regulatory sanctions for the disposal of commercial crime. The conclusions drawn from a review of the problems faced by the criminal justice system are, it is suggested, fundamental to the question of whether the increased use of regulatory sanctions is necessary, or desirable.