Regulation and Enforcement
| Pages | 337-346 |
| Published date | 01 January 1994 |
| DOI | https://doi.org/10.1108/eb025632 |
| Date | 01 January 1994 |
| Author | Michael Clarke |
| Subject Matter | Accounting & finance |
Regulation and Enforcement
Michael Clarke
Michael Clarke
is a lecturer at the Department of Sociology
and Co-Director of the Unit for the Study of
White Collar Crime, University of Liverpool.
He is a member of the Editorial Board of
The
Journal of Asset Protection and
Financial Crime.
ABSTRACT
This paper maintains that regulatory effec-
tiveness can be understood in terms of two
models of regulation, the enforcement and
the regulatory. Further, effective regulation
is much influenced by the strengths and
weaknesses of regulatory agencies, their
regulating grasp.
INTRODUCTION
The issue which this paper seeks to
address is one which is fundamental for
all those sectors in the economy
—
and
in an industrialised society that means
nearly all sectors
—
which are subject to
regulation: regulatory effectiveness. Of
course, the extent of regulation and its
stringency varies considerably, though
the extent to which it affects even the
corner shop can easily be underesti-
mated. It is expected that airlines and
pharmaceutical manufacturers will be
tightly regulated in the interest of public
safety (though there are not, perhaps,
the same anxieties about shipping). The
corner shop too is quite extensively
regulated: by prohibition on the sale of
tobacco to those under 16; by restraints
on the sale of solvents where abuse is
likely, by restraints on the sale of porno-
graphic videos and magazines; by
requirements to keep adequate accounts
for the VAT inspector; by public
hygiene regulations for the sale of food;
by regulations protecting the rights of
employees; and by local government
planning regulations, for example, on
the use of shop's frontage. Financial and
banking institutions, because of the trust
reposed in them by the public, their cen-
trality to the financial stability of the
country, and the myriad possibilities of
fraud and abuse by insiders and outsid-
ers which they offer, are particularly
subject to regulation, and its extent
seems ever increasing. Money launder-
ing is one example of an abuse which
has recently been highlighted and regu-
lation extended to cover it.
The question which anyone subject to
such regulation asks at an early stage is
whether it is to be taken seriously. The
same question is put in a different way
by those who are at risk from abuses: how
effective is the regulation? The danger is
that regulation is only so much paper, an
abstract bureaucratic requirement which
is,
for practical purposes, ignored. After
all,
there is so much regulation, and the
vast majority of economic and financial
transactions are routine and honest. Life
is too short to refer to the regulations all
the time and ensure that those respon-
sible are as certain as possible that each
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