Corporate Crime and Corporate Culture in Financial Institutions: An Australian Perspective
Recent financial market failures and corporate collapses have led to a loss of faith in many traditional legal regulatory tools used to control financial markets. The failure to successfully pursue criminal actions against senior officers in banks and financial institutions following the global financial crisis has raised questions regarding the utility of criminal prosecutions. A number of explanations for the declining use of criminal prosecutions and the use of other remedies, such as commercial settlements, have been given; this has often shifted the regulatory burden to shareholders and the community from company officers. This failure has led to a significant loss of trust in banking and financial institutions. Over the last decade, we have seen a renewed interest in the idea of corporate culture as a regulatory tool. Many financial regulatory authorities have sought to draw upon this idea in the regulation of financial institutions, although the fuzziness of the concept of culture has made it difficult to use as a prosecutorial tool. Despite some strident efforts to develop a legal model of corporate culture, it has yet to be applied widely and not at all to the financial services industry. It is unlikely to provide the “quick fix” that some market regulators had hoped for.