Policing Financial Crime: The Financial Service Authority and the Myth of the Duped Investor (From Hard Cop, Soft Cop: Dilemmas and Debates in Contemporary Policing, P 163-174, 2004, Roger Hopkins Burke, ed. -- See NCJ-206005)

• NCJ Number: 206016
• Author(s): Basia Spalek
• Date Published: 2004
• Length: 12 pages
• Sale Source: Willan Publishing
• Publication Format: Book (Softbound)
• Publication Type: Legislation/Policy Analysis
• Language: English
• Country: United States of America

Annotation

This chapter critiques the mechanisms of financial regulation in Great Britain and their impact on investors and the victims of financial crime.

Abstract

In 1997, the newly elected Labour Government renamed the Securities and Investment Board, a private company that authorized a number of self-regulatory organizations, the Financial Services Authority (FSA). Over the next few years, the self-regulatory organizations were merged into this new body; On December 1, 2001, the FSA became the single regulator with powers over the entire financial system, including the banking sectors. Upon examining the literature and policy documents issued by the FSA, a number of themes can be identified in the current financial regulatory structure. The FSA uses actuarial risk assessment methods to decide the form and intensity of its supervision. All firms operating within the financial system are assessed for risk. By determining the risk for every firm and developing the level of supervision required based on such assessments, the FSA is attempting to mount a proactive approach that will prevent financial scandals such as have occurred in the United States. This chapter questions this approach, since it does not give sufficient emphasis to the business culture prevalent in the firms that are operating in the financial system. Certain key individuals will continue to have privileged access to knowledge beyond that of consumers of the financial system and will continue to be able to exploit this knowledge to the detriment of others. Another potentially problematic aspect of the actuarial approach is the contradictory attempt to construct an image of the financial consumer as an informed individual who can have the knowledge and wisdom to prevent being victimized. This view fails to take into account that white-collar crime is largely hidden from public view by persons who are experts in deception. Victims of financial crime must not be viewed as persons who failed to take proper precautions in their financial investments. Instead, they must be viewed as crime victims whose financial losses have inflicted severe harm that requires government-sponsored remedies and restitution.