To Catch a Thief, Ask a Thief: reinforcing sanctioning regimes in financial services, a response to a Communication of the European Commission

This response to a Communication of the European Commission on ‘reinforcing sanctioning regimes in financial services’ supports the emphasis placed on more intensive investigation and detection. Sanctions remain hypothetical in the absence of detection, which is unlikely without serious investigation. Therefore, in moving towards a harmonisation (upwards) of sanction levels, consideration should be given to market participants’ perceptions of likelihood of detection, as well as their perceptions of what sanctions would be dissuasive if applied. These questions can be explored empirically, through methods of social and criminological research – including interviews with rule-breakers who have been detected and have decided to cooperate, and with rule-breakers who have not been detected but who have decided to come forward and may be found in leniency programmes (where these exist). This response also points to some difficult issues about sanctioning, reputational damage and proportionality in relation to firm size.