The White Collar Crime Centre has published its response to the recent government Call for Evidence addressing corporate criminal liability in the UK. The response addresses the failings of the identification and supports the introduction of a new offence incorporating a strict liability mechanism with ‘failure to prevent’ as an element of the offence. This is particularly important in the industry of financial services that the most grotesque abuses and failings have occurred in recent times
The Centre’s support of a new offence is conditional on either of the following two limitations being placed on applicability and scope of any new offence:
- The offence be limited in applicability to Financial Conduct Authority regulated entities and/or corporate entities listed on the London Stock Exchange. This is a defined category of corporate entity and recognises the vice of economic crime. This would only cover companies that are sufficiently well-established to be listed and those operating in the financial services sector.
- Alternatively, the offence should be limited to companies exhibiting certain characteristics e.g. of a certain size/turnover/employee size, and carrying on business in the UK. We note that under the provisions of the Modern Slavery Act 2015 a corporate turnover threshold determines applicability (currently a turnover of£36 million). Adopting a limitation of this kind would mean that corporate entities operating in a variety of industry sectors could be exposed to criminal liability for failing to prevent a range of offences. Specifically, it would capture those companies who were not necessarily FCA regulated (i.e. not operating in the financial services sectors) or LSE listed (i.e. large corporate entities who were listed on foreign exchanges but nonetheless carrying on a substantial part of their business in the UK).
The Centre identifies two reasons for limiting the offence in such a manner, namely the need to ensure consumer and client protection as well as ensuring and re-establishing market integrity. As to client and consumer protection, confining the offence to target those businesses, firms and regulated entities who engage with the public and use their funds (in a variety of ways) should improve the safety of consumers, and protect the public more generally from the harms caused by financial crime.
The Centre’s submission also calls for a full-scale review of corporate criminal liability in the UK as soon as practicable.
A copy of the response to the call for evidence can be found here.