Human Rights and the Restructuring of Financial Services Regulation in the UK
| Date | 01 April 2001 |
| Published date | 01 April 2001 |
| DOI | https://doi.org/10.1108/eb026017 |
| Pages | 179-190 |
| Author | Peter Johnstone,Jason Haines |
| Subject Matter | Accounting & finance |
Journal of Financial Crime — Vol. 9 No. 2
Human Rights and the Restructuring of Financial
Services Regulation in the UK
Peter Johnstone and Jason Haines
INTRODUCTION
The Serious Fraud Office (SFO) has been provided
with the statutory authority to demand the atten-
dance of suspects at its offices and also to demand
that information is supplied, irrespective of whether
or not the suspect has been charged with a criminal
offence. It has been held that the provisions of Art. 6
of the European Convention on Human Rights
(ECHR) do protect the defendant from
self-
incrimination, and the UK government has been
successfully challenged at the European Court of
Human Rights (ECtHR) over these issues. The
powers conferred on the SFO remain in place, but
these must now be viewed in the context of the
Human Rights Act 1998, which became law in the
UK in October 2000; unless the powers of the SFO
are reviewed by Parliament, it would seem to be
the courts who will take responsibility in the UK
for ensuring that the rights of suspects are upheld.
The UK government has recently re-evaluated the
interface that exists between the criminal prosecution
of white-collar crimes and the regulation of white-
collar offenders. The debate that remains is whether
a white-collar crime should be dealt with by means
of regulation and the imposition of a civil sanction,
or whether white-collar criminals should continue
to be dealt with by the criminal law. As part of
this re-evaluation process a new agency has been
formed, the Financial Services Authority (FSA).
The legislation that gives the FSA its power to inves-
tigate and prosecute white-collar offences is conten-
tious in much the same way as are the section 2
powers under the CJA 1987. It would appear that,
rather than resolve the differences that exist between
the SFO interpretation of human rights and the
rulings of the ECtHR, the UK government has
widened the division by granting the new agency
even greater powers than the SFO. Under the new
legislation the FSA has the authority to impose
unlimited fines on white-collar offenders without
suspects being given the protections of the standard
of proof required in the criminal law.
In this paper the UK legislation that is possibly in
breach of the ECHR is introduced, to give context
to the proposals that were presented before Parlia-
ment in respect of the FSA. The formation of the
FSA is then commented upon; the contentious
issues surrounding the power to impose fines —
criminal in nature, but civil in law — are then
analysed. It is argued that the UK government has
taken little real note of the rulings of the ECtHR
when the decisions have related to white-collar
criminals. Accordingly, the insular position taken
by the UK will create problems for the future success
of white-collar crime investigations, since the nature
of these crimes means that they are likely to become
increasingly international and that cooperation with
agencies in countries that do respect the ECHR is
vital.
LEGISLATION AND MEASURES IN
CONFLICT WITH ECTHR RULINGS
The Serious Fraud Office (SFO) has been successfully
challenged over the right to use evidence gained from
a previous civil inquiry such as one conducted by the
Department of Trade and Industry (DTI), the Bank
of England, insolvency proceedings or one of the
financial service industry regulators. If a suspect is
interviewed by a civil agency which does not have
the power to bring charges that may result in a custo-
dial sentence, then it is conceivable that the answers
supplied to questions may be substantially different
from those given to the SFO, particularly since the
suspect in the first instance may not have a solicitor
present during the civil agency interview.
The SFO has also been challenged for using
evidence obtained before charge in the SFO inter-
view conducted after charge. The use of evidence
obtained in both of these ways is potentially in con-
flict with Article 6 of the ECHR, as the suspect
may argue that the opportunity for a fair hearing
has been substantially reduced. It can be argued that
the UK has been held to be in conflict with the
spirit of the, ECHR, as 'the trend in England has
been towards attrition and formal restriction of the
privilege [against self-incrimination], the European
Court and the European Commission of Human
Journal of Financial Crime
Vol.
9,
No.
2,
2001,
pp. 179-190
© Henry Stewart Publications
ISSN 1359-0790
Page 179
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