Crime, Punishment and Consumer Protection [DRAFT]
© Peter Cartwright*
Introduction
The criminal law is perhaps society’s most visible instrument of condemnation - its
“strongest form of official censure and punishment.”1 Criminal sanctions also, however,
play a significant role in dealing with conduct that may not justify such a censorious
response. The question of what role, if any, criminal sanctions should play in the
protection of the consumer is highly topical in the UK for a number of reasons.2 First,
conflicting messages are emerging about the extent to which criminal sanctions is an
appropriate tool for dealing with corporate wrongdoing. On the one hand, some
commentators have seen evidence of a potential drift towards ‘punitive’ approaches to
regulation, with increasing emphasis being placed upon criminal sanctions.3 On the other
hand, there appears to be enthusiasm among various quarters for alternatives to criminal
law. The Hampton Review, which was set up to consider ways of reducing administrative
burdens on business by approaching regulatory inspection and enforcement more
efficiently, recommended that a comprehensive review of regulators’ penalty regimes be
1
A Ashworth Principles of Criminal Law (3rd ed) (OUP, 1999) p 17.
For a detailed examination see P Cartwright Consumer Protection and the Criminal Law (CUP, 2001).
3
See in particular R Baldwin “The New Punitive Regulation” (1994) 67(3) MLR 351. He sees “a new zest
for punitive approaches to regulation” (p 251) which is evidenced by government policy, legislative
developments and the approach of regulators.
2
1
undertaken.4 That review is now underway.5 The Government has also shown support for
rethinking the role of criminal law in regulation, and accepted the recommendations of
the Hampton Report in full.6 A second factor which makes consideration of the role of
the criminal law in consumer protection topical is that of the imminent implementation of
the Unfair Commercial Practices Directive.7 The precise effect of this implementation
remains unclear, but it would appear to have significant implications for many areas of
UK consumer protection law that have traditionally fallen under the umbrella of criminal
law.8
This paper will suggest that while the criminal law should continue to play a role
in the protection of the consumer, it is time to reconsider precisely what that role should
involve. It will be argued that criminal law should be used to deal with serious wrongs
committed against consumers, although it will also be suggested that few of these wrongs
can be classified appropriately as consumer protection offences. The paper will then
consider whether criminal law should continue to play a role in dealing with less serious
wrongs – those that would fall under the broad category of regulatory offences. This is a
more difficult issue. Criminal sanctions have long been established as a tool of consumer
protection in the UK, and the removal of some of these offences might be thought to
convey an unfortunate message. Furthermore, it will suggested that one can to take issue
4
HM Treasury Reducing Administrative Burdens: Effective Inspection and Enforcement (the Hampton
Report) (March 2005) para 2.86.
5
See BRE Regulatory Justice: Sanctioning in a post-Hampton World (undated). Although the Hampton
review was concerned primarily with reducing administrative burdens, this did not translate to a call for
less stringent penalties (see ibid).
6
DTI A Fair Deal for All (June 2005) para 8.4. My discussions with DTI officials have also revealed an
ambivalent approach towards the use of criminal sanctions in consumer protection.
7
Directive 2005/29/EC.
8
See DTI The Unfair Commercial Practices Directive: Consultation on implementing the EU Directive on
Unfair Commercial Practices and Amending Existing Consumer Legislation (DTI, December 2005) and the
discussion below.
2
with some of the criticisms that have been made of the use of regulatory offences.
Nevertheless, significant questions remain about criminal law’s role in protecting
consumers. This paper engages with these, and concludes that it may be time to initiate a
move away from criminal law and towards alternative mechanisms for punishing errant
traders.
When is conduct criminal?
It is possible to answer the question “when is conduct criminal?” in a formal manner.
Lord Atkin argued that the criminal nature of an act can be discovered by reference only
to one question: “is the act prohibited with criminal consequences?”9 But might
additional characteristics be necessary before we properly classify conduct as criminal?
Hart argued that a crime is not “simply any conduct to which a legislature chooses to
attach a criminal penalty. It is conduct which, if duly shown to have taken place, will
incur a formal and solemn pronouncement of the moral condemnation of the
community.”10 This point has been reflected in recent discussions on the role of criminal
sanctions in regulation. For example, the Better Regulation Executive’s discussion paper
Regulatory Justice: Sanctioning in a post-Hampton World argues that criminal
prosecution “attaches a severe moral condemnation and a criminal record to a business or
individual”.11 For the purpose of this paper, it will be argued that an act is a crime if it is
9
Proprietary Articles Trade Association v Attorney General for Canada [1931] AC 310 at 324.
10
11
Better Regulation Executive Regulatory Justice: Sanctioning in a post-Hampton World (BRE undated)
para 1.28.
3
defined by law as such.12 However, such an approach does not preclude our questioning
what criminal law should involve from a normative perspective. It is to this that we turn.
What should be criminal?
If labelling someone as criminal does involve a significant element of moral
condemnation in the eyes of the public, then the willingness (or even enthusiasm) with
which states classify conduct as criminal is a matter of great concern. Much liberal
criminal justice scholarship sees criminalisation as something that should be a last resort.
Indeed, the doctrine of minimal criminalisation has been recognised by Labour
governments since 1997. However those administrations have done little to slow the
creation of new offences, many of which lack any significant condemnatory character.13
The fear of over-criminalisation has characterised much of the objection to the use
of the criminal law. Mill most famously argued that criminal law should deal only where
there is harm to others, and while Feinberg and others have found alternative
justifications for the use of criminal sanctions (in particular, offence to others) there
remains a powerful case for restricting the use of the criminal law. 14 Recently, Ashworth
has asked whether the criminal law is “a lost cause”, and in so doing has called for
12
It is helpful to consider the position under the ECHR here. It has been held that if national law defines
proceedings as criminal then this will be conclusive. However, proceedings may be found to be criminal for
the purposes of the ECHR even where national law does not regard them as such. See e.g Benham v UK
(1996) 22 EHRR 293.
13
Lord Williams of Mostyn stated that offences should only be created “when absolutely necessary”, and
that when considering whether to create new offences, the Government will take into account whether: “the
behaviour in question is sufficiently serious to warrant intervention by the criminal law; the mischief could
be dealt with under existing legislation or by using other remedies; the proposed offence is enforceable in
practice; the proposed offence is tightly drawn and legally sound; and the proposed offence is
commensurate with the seriousness of the offence.” HL Deb vol.602 WA 57 (June 18 1999) cited in
Ashworth “Is the Criminal Law a Lost Cause” at 229.
14
See JS Mill On Liberty (1859). J Feinberg Offense to Others (1986 OUP).
4
recognition of a principled core of criminal law.15 For Ashworth and others, criminal law
is more than merely instrumental. The label “criminal” implies an element of censure that
other forms of social control lack. As a result, criminal law should, on this view, be
concerned only with serious wrongdoing. To what extent do consumer protection
offences reflect this paradigm? It is helpful, first, to consider the role of criminal law in
protecting the consumer from serious wrongdoing.
Consumer Protection and Serious Crime
It is submitted that the first contention in this article is one with which most
commentators are likely to agree: that criminal law has an important role in protecting
consumers from serious wrongdoing. A distinction is sometimes drawn between crimes
mala in se and crimes mala prohibita. Offences mala in se are those that are wrong in
themselves: “sins with legal definitions”.16 There is consensus that it is appropriate for
the criminal law to be invoked to deal with such conduct. Although there are different
ways of assessing seriousness, it is submitted that the main indicators of seriousness are
(1) the degree of culpability involved; and (b) the degree of harm (actual or potential)
involved.17 Consumers will sometimes be victims of serious wrongdoing and, where they
are, it is frequently appropriate for criminal law to step in. For example, if a consumer
was killed by a product that its suppliers knew to be dangerous, it is conceivable that a
15
A Ashworth is the Criminal Law a Lost Cause? (2000) 116 LQR 225.
Per Lord Devlin at a Holdsworth Club presidential Address. Cited in G Borrie The Development of
Consumer Law and Policy: Bold Spirits and Timorous Souls (London, Stevens and Sons 1984) at p 46.
17
It is conceded that this is a very simple account of seriousness. For a far more sophisticated attempt at
assessing seriousness see A von Hirsch and N Jareborg “Gauging Criminal Harms: a Living Standard
Analysis” (1991) 11 OJLS 1. As Ashworth argues “[t]he task of assessing the seriousness of offences
is…as complex and problematic as it is unavoidable and fundamental.” A Ashworth Principles of Criminal
Law (3rd ed) p 41.
16
5
prosecution for manslaughter might follow.18 The criminal law should protect consumers
from serious harm (and potential harm) caused with mens rea, as it protects individuals
when not acting as consumers. But these wrongs are not easily classified as “consumer
protection offences.” While manslaughter may in some cases have the effect of protecting
individuals when they are acting as consumers, it is not conceived of as a consumer
protection measure. In the case of the dangerous product causing death, the victim’s
status as a consumer is not relevant.19 Similarly, a conviction for obtaining property by
deception might follow from a trader’s dishonestly tricking a consumer about a product
the former was selling. Section 15 of the Theft Act 1968 which contains this offence is
undoubtedly an example of a serious offence – an offence mala in se, and it may be
utilised to protect consumers, but again it is not a consumer protection offence.20
Are there examples of serious wrongs that are properly classed as consumer
protection offences? To the extent that seriousness is based on harm, product safety
legislation might be a candidate for such a label, but it is submitted that product safety
laws are not perceived as real crimes.21 It was noted above that the other main element of
seriousness is culpability, normally expressed in terms of mens rea.22 Relatively few
offences that would usually be described as “consumer protection offences” require proof
18
I am assuming here that it is appropriate to class manslaughter as an offence requiring mens rea. Even
this is questionable. Constructive, or unlawful act manslaughter requires proof of intention to do an act
which is unlawful and dangerous, but imposes strict liability as to the causing of death. Death or serious
harm need to be foreseeable: see Mallet [1972] Crim LR 260. Manslaughter by gross negligence requires
proof of gross negligence, but there is debate about whether it is appropriate to describe any form of
negligence as mens rea. See P Brett An Inquiry into Criminal Guilt (Sweet and Maxwell 1963).
19
A manslaughter conviction could equally follow if the victim were a third party, not acting as a
consumer.
20
See David CE Roberts “The Use of the Theft Act in Trading Standards Cases” (1992) 9(4) Trading Law
205.
21
Such laws are generally seen as regulatory offences.
22
There is scope for debate about whether mens rea always equates with culpability, particularly where
objective standards are applied.
6
of mens rea, but there are some. For example, s.14 of the Trade Descriptions Act 1968
requires the prosecution to prove either that a statement was made recklessly, or that it
was known to be false when made.23 Hansard reveals that the mens rea requirement was
introduced because of the novelty of using criminal sanctions to deal with false
statements about services.24 Parliament wanted to distinguish between goods (where
criminal sanctions had previously been used and strict liability imposed) and services,
where proof of fault would be required. However, the courts have tended to play down
the effect of the mens rea requirement, and so the criminal nature of the provision. In
Wings v Ellis, s.14(1) of the TDA was described as “not a truly criminal statute”. In that
case, their lordships concluded that such a conclusion was “consistent with the social
purpose of a statute in the class to which this act belongs.”25 Therefore, despite the fact
that the section required proof of mens rea, it was not viewed as truly criminal.26 Lord
Scarman stated in Wings v Ellis that the prime object of the TDA is “not the enforcement
of the criminal law, but the maintenance of trading standards.” Such interpretation
allowed the House to conclude that the general principles governing the interpretation of
criminal statutes did not apply to s.14.27 This adds weight to the view that the offences in
s.14 are not part of the mainstream criminal law, despite their requiring proof of mens
rea.
23
Although the effect of this mens rea requirement has been watered-down considerably by decisions of
the appeal courts.
24
759 HC Deb col 683.
25
[1985] AC 272 at 295.
26
The courts also adopted a broad interpretation of the term recklessness in s.14(1)(b) of the 1968 Act. See
for example MFI Warehouses Ltd v Nattrass [1973] 1 WLR 307 per Lord Widgery at 312 and Dixons Ltd v
Roberts (1984) 148 JP 513 per Forbes J at 519. For discussion see P Cartwright “Reckless Statements,
Trade Descriptions and Law Reform (1996) 47(2) NILQ 171.
27
[1985] AC 272 at 295. This approach contrasts with that taken in other cases under the Act. For example,
in Miller v Pickering Bull and Co, McNeil J argued that while the Act is a statute for the protection of
consumers “it is also a penal statute: unless Parliament has made it clear that particular conduct is criminal,
the courts…should not seek artificial constructions of the statutory words to make it so.” [1981] 3 All ER
265 at 270
7
Two conclusions may be drawn from the discussion above. The first is that there
are examples of truly criminal offences, which will sometimes apply in the context of an
injured consumer. It is submitted that there is little difficulty with classifying such
conduct as criminal, but more difficulty with classifying those measures as consumer
protection provisions. Secondly, although there are offences which are appropriately
described as consumer protection measures, and which might be viewed as “serious” in
the sense that they require proof of mens rea and/or involve serious or potentially serious
harm, those offences appear not to be regarded as truly criminal. This suggests that there
is a distinction between consumer protection offences and real crime, and that it is not
formed solely on the basis of the need for proof of culpability, and/or the need to prove
the risk or occurrence of serious harm. It is appropriate now to turn our attention to this
class of offences – regulatory offences as they are frequently described – to investigate
the extent to which it is appropriate that they utilise the criminal law.
Consumer Protection and Regulatory Offences
It is possible to contrast offences mala in se, with offences mala prohibita, (sometimes
referred to as regulatory offences or quasi crime) which are those “which are not criminal
in any real sense, but are acts which, in the public interest, are prohibited under a
penalty”.28 Ramsay identifies three principal characteristics of regulatory crime.29 First, it
tends to be over-inclusive, imposing strict liability which is tempered by statutory
defences. Secondly, it is enforced by specialised bureaucracies which use discretion in
28
Sherras v De Rutzen [1895] 1 QB 918 at 922.
I Ramsay Consumer protection: text and materials (Weidenfeld and Nicolson, 1989) at 183. Other
commentators accept the terminology of regulatory offences, but differ in the characteristics they attribute
to them. See e.g. N Lacey C Wells and O Quick Reconstructing Criminal Law (3rd ed, Butterworths, 2003)
p 645
29
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the implementation and enforcement of standards. Thirdly, it tends to be implemented by
magistrates’ courts, with higher courts developing matters of policy. Other possible
characteristics of regulatory crime are fourthly, that defendants will tend to be businesses,
or people acting in the course of business rather than private individuals, and fifthly (and
importantly) that it tends to carry relatively little stigma.30 It is important to emphasise
that the characteristics identified above are merely indicators of whether an offence is
likely to be viewed as regulatory; there is no formal category of regulatory offences
recognised by the criminal justice system.31 Nevertheless, there is little doubt that
consumer protection offences would be classed as regulatory offences. Examples of
statutes based wholly or largely on the imposition of criminal sanctions are the Trade
Descriptions Act 1968, the Consumer Protection Act 1987 (Part III), the Food Safety Act
1990 and the General Product Safety Regulations 2005. These are paradigms of the
regulatory offence. They are enforced, largely through the magistrates courts, by
specialised bureaucracies (generally local authority trading standards departments and
environmental health departments). They are also enforced by way of compliance
strategies.32 They (generally) impose strict liability and are subject to due diligence
defences. In addition, they focus on defendants who act in the course of trade or business
and carry relatively little stigma. It is helpful now to consider the principal arguments
against using criminal law in the form of regulatory offences. In line with the theme of
30
See P Cartwright Consumer Protection and the Criminal Law (CUP, 2001) at 84.
This contrasts with jurisdictions such as Germany, which recognises the concept of ordnungswidrigkeiten
or administrative offences. There have sometimes been attempts to argue that regulatory offences are not
part of the criminal law. See e.g. A Freiberg and P O’Malley “State Intervention and the Civil Offence”
(1984) 18 Law and Society Review 373.
32
See below.
31
9
this piece the discussion below is in the context of consumer protection, but many of the
arguments also apply in other areas of regulatory criminal law.
OBJECTIONS TO THE USE OF CRIMINAL LAW IN REGULATORY OFFENCES
Regulatory offences may not always be enforced in a consistent manner
The first objection to the use of criminal law is that consumer protection offences may
not always be enforced in a consistent manner. Ashworth argues that criminal laws
should always be enforced with respect for equal treatment and proportionality. In
relation to equal treatment, he opines that “those who commit wrongs of equivalent
seriousness in relatively similar circumstances should be subject to censure of a similar
magnitude”, and views this as an important principle of criminal law. 33 Other
commentators have pointed to the risk of regulatory capture, where the close connections
between enforcement authorities are the industries they are charged with regulating lead
to the public interest being subordinated to that of the industry.34 Inconsistent
enforcement may be a symptom of regulatory capture.
Consumer protection offences are enforced by authorities which adopt
compliance strategies in preference to formal prosecution.35 A compliance strategy has as
its aim “to secure conformity with law by means of ensuring compliance or by taking
action to prevent potential law violation without the necessity to detect, process and
penalise violations.”36 By contrast, the aim of a deterrence strategy is “to secure
Ashworth “Is the Criminal Law a Lost Cause?” op cit at 245.
See generally M Bernstein Regulating Business by Independent Commission (Princeton University Press,
1955).
35
See AJ Reiss "Selecting Strategies of Social Control Over Organisational Life" in K Hawkins and J
Thomas (eds) Enforcing Regulation (Boston: Kluwer Nijhoff, 1984) 23.
36
Ibid at 23.
33
34
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conformity with the law by detecting violation, determining who is responsible for the
violation, and penalising violations to deter violations in the future, either by those who
are punished or by those who might do so were violations not penalised.”37 In some
sectors an enforcement agency may adopt a compliance strategy in relation to most types
of wrong but a deterrence strategy in particular types of case.38 However, where
consumer protection is concerned, it seems that trading standards officers generally adopt
compliance strategies, viewing prosecution as something of a last resort. According to
Bragg: “[enforcement officers’] normal attitude is to see their major role as one of
attempting to acquire compliance with legislation by information and persuasion...in
many authorities prosecution is seen as a last resort and, sometimes, even as an admission
of failure.”39
It is submitted that some of the concerns with the use of compliance strategies,
and the extent to which they produce inconsistent enforcement in practice, may be
overstated. First, despite the one-time popularity of capture theory, there are significant
doubts about the extent to which it reflects the conduct of enforcement authorities or
other regulators.40 Secondly, bargaining and negotiation may simply be the most effective
37
ibid at pp 23-24.
See J Rowan-Robinson, PQ Watchman and CR Barker "Crime and Regulation” [1988] Crim LR 211 at
pp 216-217.
39
RJ Bragg Trade Descriptions (Oxford, Clarendon Press, 1991) p 202. Empirical research, although now
somewhat dated, has shown that this strategy is favoured in the context of trade descriptions legislation.
See e.g. R Cranston Regulating Business: Law and Consumer Agencies (London, MacMillan, 1979). The
General Product Safety Regulations 2005 now provide a statutory requirement that enforcement authorities
first seek voluntary action (see reg 10(5)).
40
Makkai and Braithwaite found “little support for the theory that regulatory enforcement is under the
hegemony of the private interests from which so many regulators come – or to which they hope to go.”
See T Makkai and J Braithwaite “In and Out of the Revolving Door: Making Sense of Regulatory Capture”
(1995) 1 Journal of Public Policy 61 at p 78.
38
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options for the enforcement agency. “Punishment is expensive; persuasion is cheap.”41
Indeed, the cost of regular prosecution may be prohibitive.42 Furthermore, there is some
evidence that compliance strategies increase trust between regulators and regulated and
this may improve the flow of information between them, which in turn leads to more
effective enforcement. Painter has argued that successful enforcement “depends upon
goodwill and co-operation between manufacturers, distributors, and enforcement officers.
Unless trades people can discuss problems freely, uninhibited by fear of prosecution, the
quality of service must suffer.”43 By contrast, a strategy based on punishment may foster
“an organised business subculture of resistance to regulation”.44 This view has been
expressed in a number of different areas.45 Adopting punishment as a first choice strategy
may be seen as “unaffordable, unworkable, and counter productive in undermining the
good will of those with a commitment to compliance.”46
Ashworth refutes suggestions that such approaches are effective in the long term,
or justified on the basis of being economical.47 In relation to the first point, although it
has been suggested that deterrence, or sanctioning strategies, would have the effect of
reducing contraventions of regulatory legislation, the evidence on this is inconclusive.48
41
Ayres and Braithwaite Responsive Regulation (OUP, 1992) p 19. Veljanowski found that prosecution
was from eight to ten times more time consuming than the typical factory visit. See C Veljanowski
“Regulatory Enforcement: An Economic Study of the British Factory Inspectorate” (1983) 5 Law and Pol
Q 75 at p 86
42
The issue of cost is discussed further below.
43
AA Painter “Why Prosecute?” (1974) 76 British Food Journal 38 at p 38.
44
Ayres and Braithwaite Responsive Regulation p 20.
45
See Bardach and Kagan Going by the Book. G Richardson, A Ogus and P Burroughs Policing Pollution
(Oxford, Clarendon Press, 1982) p 126 and R Cranston Regulating Business (1979).
46
Ayres and Braithwaite op cit p 26.
47
Ashworth “Is the Criminal Law a Lost Cause?” at 248.
48
See the less than conciliatory debate on the topic in the pages of the British Journal of Criminology in the
form of F Pearce and S Tombs “Ideology, Hegemony and Empiricism” (1990) 30 Brit J Criminol 423 and
K Hawkins “Compliance Strategy, Prosecution Policy and Aunt Sally” (1990) 30 Brit J Criminol 444.
12
In relation to the second point, if the justification for compliance strategies were merely
that they save money, this would be a matter for concern.49 Certainly, enforcement
authorities argue that they are under-funded, and this is a matter which should be
addressed. But it is by no means certain that a higher level of funding would necessarily
lead to a greater number of prosecutions. This is, however, a matter that needs further
investigation. Another point on consistency is that there are measures in place that aim to
ensure that enforcement is carried out equally within a particular sphere of activity, for
example, co-ordination of enforcement activity on food and trading standards by
LACORs.50 This addresses, for example, the risk of inconsistent enforcement of
consumer protection offences.
Regulatory offences may apply where the harm (if any) is minor
Another objection to the use of consumer protection offences is that apply where the
harm in question is relatively minor. Ashworth’s argument that the criminal law should
only be used to censure persons for substantial wrongdoing has already been noted. He
suggests that harmfulness should be judged in terms of its effect upon valued interests, be
they individual or collective.51 Consumer protection offences apply where there is no
victim and where, even if there were, the harm suffered would be minor. There is strength
in the view that the authority of criminal law may be reduced where it is seen to concern
itself with trifling matters. It has already been noted that regulatory offences tend, by
49
Some studies assume that the rarity of prosecutions is down to inadequate resources. See Cranston (1979)
Regulating Business: Law and Consumer Agencies (London, Macmillan, 1979) and JE Conklin Illegal But
Not Criminal (Englewood Cliffs, Prentice Hall, 1977).
50
LACORS stands for the local authorities coordinators of regulatory services. It is a local government
body that helps to coordinate the enforcement activities of local authorities’ regulatory and related services.
51
Op cit. Ashworth is concerned not only with the degree of harm, but also the degree of culpability;
intention or recklessness would be necessary for the requirement to be met. This would exclude offences of
strict liability, even if subject to due diligence defences. This is considered below.
13
their very nature to be over-inclusive.52 In practice, the effects of this over-inclusiveness
tend to be minimised by discretion in enforcement. However, some cases may lead the
reader to wonder whether a prosecution was really an appropriate response. Examples
such as McDonalds Hamburgers v Windle53 and Smedley’s Ltd v Breed54 are illustrative
here. It is important to remember that newspaper headlines, and even law reports, seldom
reveal the full story behind the litigation. However, the potential for convicting a
defendant for minor harm remains and is cause for concern. Furthermore, it might be
argued that over - reliance on prosecutorial discretion “puts at risk the rule of law in so
far as it leaves the prospect of criminal conviction to the discretion of enforcement
officers.”55
Levels of sanctioning may not be appropriate
A further concern relates to sanctioning. On the one hand, sanctions may sometimes be
seen in some cases to be disproportionate, particularly where the trader lacks any moral
fault. It should be remembered that we should consider not only the penalty imposed by
the court, but the other costs of being involved in a prosecution. Indeed, from a practical
perspective, the main sanctions are likely to be the inconvenience in having to fight a
prosecution and the potential negative publicity that might arise from a conviction rather
than the formal sanction. As Baldwin recognises “penal effects may extend very
considerably beyond the level of any fine imposed.”56 For example, he suggests that
52
See Ramsay op cit.
[1987] Crim LR 200
54
[1974] AC 839.
55
Simester “Is Strict Liability Always Wrong?” at p 33.
56
R Baldwin op cit at 371. As noted below, some of these could be argued to be disproportionate in certain
cases.
53
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prosecution may adversely affect reputation, cause operational disturbances and
managerial disruptions, worsen relationships between regulator and regulated and
adversely affect investor relations.57 However, it may be that more concerning is the risk
that the sanction may be insufficient to reflect the seriousness of the offence. There is
some evidence that the penalties imposed in regulatory offences are frequently
insufficient to act as a deterrent.58 A further problem is that of inconsistency in
sanctioning. It has already been noted that the majority of regulatory offences are heard
in the Magistrates’ Court. According to the Department for Constitutional Affairs, a
typical magistrate will see a health and safety offence once every 14 years, and an
environmental offence every 7 years. This may explain why inconsistency arises. 59 To the
extent that inconsistency in sanctioning results, this is of concern to those who see
consistency as one of the key principles of the criminal law.
Regulatory offences are resource-intensive
While regulatory offences may not be as resource intensive as the mainstream criminal
law, they may, nevertheless, be unsuited to what may be relatively minor infringements.
As the Better Regulation Executive argues “[t]he wholesale use of criminal proceedings
to sanction regulatory offences…imposes a burden on the court system. This results in
long waits for regulators and business in having cases heard. It also prolongs the
57
Ibid.
Regulatory Justice found that many regulators believed that “financial penalties, in many cases, did not
exceed the financial benefit of non-compliance, creating in effect perverse incentives for businesses not to
comply with regulatory obligations.” (para 1.2).
59
Quoted in Regulatory Justice para 1.34. It may also explain why some sanctions appear surprisingly low.
It could be argued that given the usual caseload of magistrates, which involves many violent and property
crimes, regulatory offences appear minor.
58
15
resolution of the issue for the business.”60 It may be that this, in part, explains why
relatively few prosecutions are initiated for regulatory offences. It was noted above that
there are several reasons why it might be legitimate for formal prosecution to take place
as a last resort. However, if the paucity of prosecution reflects the expense of the court
process, and regulators feel unable to prosecute cases where such action is deserved, this
is a matter of great concern.
Regulatory offences impose strict liability
Perhaps the most significant objection to the use of regulatory offences is that they
impose strict liability. As a result, they may lead to the punishment of those lacking
culpability and so constitute a misuse of the criminal law.61 This relates, of course, to the
earlier discussion about what it means for conduct to be “criminal”. To the extent that the
label of criminality implies a significant element of censure (if not moral condemnation)
we may feel uneasy imposing strict liability for crime that does not involve serious
wrongdoing. Fundamental to Ashworth’s conception of criminal law is that it exists
primarily as a means of censure: “[m]y conception of criminal law gives primary place
to its censuring function”.62 Simester shares some of Ashworth’s concerns, and argues
that “the right not to be wrongly censured defeats any instrumental case for strict liability
in stigmatic crimes.”63 From Simester’s perspective, the advantages to the prosecution of
strict liability offences cannot override the offence caused by labelling someone as guilty
60
Ibid para 3.9.
The presumption in favour of mens rea has recently been affirmed, but it appears that this presumption
will easily be rebutted (if it applied at all) where the offence is regulatory in nature.
62
Op cit p 250.
63
AP Simester “Is Strict liability Always Wrong?” in AP Simester (ed) Appraising Strict Liability (OUP,
2005) 21 at 37. However, he later argues that elements of strict liability may such a role in limited cases.
61
16
of a serious offence when they lack moral fault. But this approach does not prevent strict
liability being imposed in all cases. It allows for the use of strict liability where the
stigma usually associated with the criminal law is lacking. This raises questions about the
extent to which a distinction can be drawn between stigmatic and non-stigmatic offences.
There is some evidence that defendants do care about being labelled as criminals for
committing regulatory offences, as well as about the financial consequences of
conviction. Borrie has suggested that major companies “are particularly resentful when a
local trading standards officer in some part of the country secures a conviction which
may be publicised in the local media.”64 More recently, Baldwin has noted that “very
many companies find the imposition of a criminal sanction surprisingly shocking.” 65 This
may reflect the contention that while the distinction between stigmatic and non-stigmatic
offences might occur in the minds of those well-versed in regulatory criminal law, it will
not be present in the minds of others. Although it has been argued that “most people
distinguish in ordinary life between minor, regulatory-type offences and “true” crimes”
this will not always be so.66 As a result, conviction may lead to a disproportionate
reaction on the part of the public. If consumers regard conviction as implying culpability
and consider changing their purchasing habits as a result, it is not surprising that some
businesses are liable to feel aggrieved in the way Borrie and others suggest.
Any confusion in the mind of consumers as to the extent to which conviction may
imply culpability leads to another problem. Not only may strict liability penalise those
G Borrie “Law and Codes for Consumers” (1980) JBL 315 at 321. Despite these observations, Borrie has
argued elsewhere that some companies will be less concerned, treating the resulting fines as “tiresome pin
pricks” (see G Borrie The Development of Consumer Law and Policy: Bold Spirits and Timorous Souls
(London, Stevens and Sons 1984) at p 56.
65
Baldwin op cit at 372.
66
AP Simester and GR Sullivan Criminal law: Theory and Doctrine (2nd ed, Hart Publishing, 2003) p 28.
64
17
who are not at fault, but it may not distinguish adequately between those who are highly
culpable (for example, acting advertently), those who are less culpable, (for example,
acting negligently) and those who are not culpable at all.67 Conviction of the innocent is
perhaps the major concern, but there is also a worry that those with a high degree of
culpability may escape appropriate censure. Where strict liability is imposed, mens rea is
irrelevant to guilt, and therefore inadmissible in evidence. Although it might be relevant
to sentencing, this would require a further hearing.68 The result may be, therefore, that the
conviction does not accurately reflect the seriousness of the conduct in question. In many
cases, the maximum penalty will mean also that the sanction does not reflect that
seriousness.
Due Diligence Defences
It was noted above that virtually all consumer protection offences are subject to due
diligence defences. For example, s.39(1) of the Consumer Protection Act 1987 states: “in
proceedings against any person for an offence to which this section applies it shall be a
defence for that person to show that he took all reasonable steps and exercised all due
diligence to avoid committing the offence.” As these defences aim to distinguish between
those who are at fault and those who are not, do they help to provide a justification for
the use of strict liability regulatory offences? Some commentators remain unconvinced.
Ormerod argues that “such provisions are a distinct advantage on unmitigated strict
liability; but they are still a deviation from the fundamental principle that the prosecution
must prove the whole of their case; and an extensive use of offences of strict liability,
67
68
For these purposes I am treating negligence as a form of culpability.
See Newton (1983) 77 Cr App R 13.
18
even when so qualified, is to be deplored.”69 Ormerod’s objection is that such defences
offend the principle that it is the task of the prosecution to prove that the defendant is
guilty, and not for the defence to prove that he is not.70 But regard must be had to the role
of the defence. The point of a due diligence defence is to distinguish between the person
who has done all he reasonably could to avoid committing an offence, and the person
who has not. In practice it is extremely difficult to prove a negative. This is particularly
so when we consider the issues that are likely to satisfy a court that due diligence has
been exercised.71 Ormerod is correct to point out that this goes against the usual
principles of proving offences, but it produces little injustice. Conceptually, the problem
could be avoided by placing a requirement of the prosecution to prove beyond reasonable
doubt that (a) the harm etc was committed, and (b) that the defendant had failed in his
duty to take all reasonable precautions and exercise all due diligence to avoid the
commission of the offence. There are, indeed, arguments that the law should be more
willing to punish defendants (in particular corporations) for failing to etc.72 However, it is
submitted that due diligence defences do go some towards addressing concerns about the
imposition of strict liability.
Regulatory offences may not work effectively
69
D Ormerod, Smith and Hogan p 163.
It might be argued that strict liability offends the presumption of innocence guaranteed by Article 6(2) of
the ECHR. However, that seems unlikely to be accepted. In Salibaku v France, the European Court of
Human Rights stated that “in principle, the contracting States may, under certain conditions, penalize a
simple or objective fact as such irrespective of whether it results from criminal intent or from negligence.”
(1998) 13 EHRR 379. See P Roberts “The Presumption of Innocence Brought Home? Kebiliene
Deconstructed” (2002) 118 LQR 41.
71
See for example Tesco Supermarkets Ltd v Nattrass [1972] AC 153. Whether reasonable
precautions/steps are taken and due diligence exercised is a question of fact.
72
See e.g. B Fisse and J Braithwaite Corporations, Crime and Accountability (CUP, 1993).
70
19
The question of the effectiveness of consumer protection offences is of central
importance. If regulatory offences are viewed purely in an instrumental fashion, then we
might be able to find some justification for them on the basis that they work.73 One
obvious advantage of strict liability regulatory offences over mens rea offences is that the
prosecution does not have the burden of proving mens rea. Even if, in practice,
prosecutions are seldom brought in the absence of fault, the removal of the requirement
to prove mens rea gives the prosecution a stronger hand. As Richardson notes,
“enforcement is conducted against a background of the criminal law and the implicit
threat of its invocation.”74 From the point of view of the effectiveness of compliance
strategies, therefore, strict liability may bring benefits when compared with mens rea
offences.
Punishing through the mechanism of the criminal law has several objectives, but
the principal objective in the context of consumer protection offences is probably
deterrence.75 Wells argues that: “[m]ost corporate crime theory has been deterrent-based,
in the sense that the purpose of instituting sanctions has been to discourage violations and
encourage good practice”,76 and the Law Commission has suggested that the criminal law
could have a strong deterrent effect on corporations because of the publicity that results
73
See e.g. Simester op cit especially pp 25-30.
G Richardson "Strict Liability for Regulatory Crime: The Empirical Research" [1987] Crim LR 295 at p
303.
75
The principal aims of punishment are said to be deterrence, incapacitation, rehabilitation, desert and
restoration. Deterrence seems the most obvious justification for punishment in the business context,
although there may also be room for desert-based theories. See P Cartwright chap 3 and K Yeung Securing
Compliance: a Principled Approach (Oxford, Hart, 2004) chap 4.
76
Wells Corporations and Criminal Responsibility p 31.
74
20
from their prosecution.77 There is no doubt that corporations pay close attention to their
status and image, and the label of conviction may affect this adversely.78 It has already
been noted that many businesses do care about being labelled as criminals for breaching
regulatory offences. As Ball and Friedman argue: “the word “crime” has symbolic
meaning for the public and the criminal law is stained so deeply with notions of morality
and immorality, public censure and punishment, that labelling an act as criminal often has
consequences that go far beyond mere administrative effectiveness”. They conclude that
“businessmen abhor the idea of being branded a criminal”, and that fear of prosecution is
an effective deterrent to business people.79 It is sometimes assumed that business
defendants are particularly liable to be calculating, and so particularly responsive to
deterrent-based sanctions. In the words of Ramsay:80
“while criminals generally do not carefully calculate the probable consequences
of their actions and therefore are often not deterred by the threat of punishment,
this cannot be said of the corporate criminal. Since corporate activity is normally
undertaken in order to reap some economic benefit, corporate decisionmakers
choose courses of action based on a calculation of potential costs and benefits.”
This thinking is undoubtedly influential. Economic models have been constructed
to try to establish when to prosecute and what sanction to impose, based on assumptions
77
Law Commission (1972) para 88. For a contrary view see Ramsay Consumer Protection: Text Cases and
Materials (London, Weidenfeld and Nicolson, 1989) p 190
78
C Wells op cit p 37.
79
Harry Ball and Laurence Friedman “Use of Criminal Sanctions in the Enforcement of Economic
Legislation: a Sociological View” (1965) 17 Stanford Law Review 197 at 216-217.
80
I Ramsay “Developments in the Law: Corporate Crime” (1978-79) 92 Harvard L Rev 1227 at 1231.
21
about how businesses are likely to act.81 Kagan and Scholz divide businesses into
different categories such as political citizens, amoral calculators and the organisationally
incompetent.82 Amoral calculators are those who are “motivated entirely by profitseeking” and who “carefully and competently assess opportunities and risks.”83 For these
businesses, as the authors argue, enforcement should focus on deterrence by prosecution.
But many businesses will not be quite so calculating in practice. Some recent empirical
research questions the extent to which punitive approaches to regulation encourage
compliance on the part of many businesses.84 Baldwin comments as follows:85
“Corporations…will often be confused and irrational about punitive risks; their
staff may conflate individual and corporate liabilities; they may be poorly
organised to deal with, anticipate or react to punitive risks and the effects of
sanctions; their Boards may under-perform in supervising or providing leadership
on punitive risk management and they may be poorly placed to assess how they
and their staff are performing as risk managers.”
This raises a number of issues about the relationship between compliance,
deterrence and risk management. In part, it reflects the idea of the business as
organizationally incompetent – inclined to obey the law but potentially fallible.86 Ayres
81
See for example G Becker and the simplified example adopted in A Ogus Regulation: Legal Form and
Economic Theory (OUP, 1994).
82
Robert A Kagan and John T Schloz The “Criminology of the Corporation” and Regulatory Enforcement
Strategies in Keith Hawkins and John M Thomas (eds) Enforcing Regulation (Kluwer-Nijhoff, 1984) 67 at
67.
83
Ibid.
84
See for example R Baldwin and R Anderson Rethinking Regulatory Risk (London, DLA, 2002).
85
J Baldwin op cit at 370.
86
Kagan and Scholz op cit.
22
and Braithwaite also emphasise the extent to which offences arise from organisational
failure on the part of businesses who want to comply.87 In such cases, it is doubtful how
appropriate deterrence-based thinking is.
It is important to think about the role of strict liability offences in encouraging
high standards rather than simply deterring wrongdoing. It has been suggested that “the
existence of strict liability does induce organisations to aim at higher and higher
standards”, although the evidence on this point is not conclusive.88 It might be argued that
due diligence defences play a role here. A defendant who knows that he can escape
liability by showing the taking of all reasonable precautions and exercising of all due
diligence has an incentive to establish systems to satisfy this requirement.89 This will not
only make commission of the actus reus less likely, but will also help to ensure that,
should it occur, a defence can be argued. It may be, therefore, that strict liability offences,
when coupled with due diligence defences, provide appropriate incentives for businesses
to take care. However, the difficulties identified by Baldwin above remain.
Deterrence, Stigma and Labelling
It was noted above that it could be argued that criminal sanctions operate effectively as a
deterrent because they carry stigma. This, however, is problematic. First, it is not clear to
what extent regulatory offences are stigmatic. It is submitted that while they may have
some stigma attached to them, they carry less stigma that traditional crimes. This may
87
Ayres and Braithwaite op cit chap 2.
M Smith and A Pearson "The Value of Strict Liability" [1969] Crim LR 5 at 16. Dickson J has argued
that “there is no evidence that a higher standard of care results from absolute liability”. City of Saulte Ste
Marie at p 171. He is using the phrase “absolute liability” in the sense that the term "strict liability" is used
in this piece.
89
The courts will frequently be influenced by the paper system that the defendant has in place. See Tesco v
Nattrass [1972] AC 153.
88
23
reduce the extent to which they are effective as a deterrent. Secondly, it is a cause for
concern if the stigma of conviction is being used as part of the sanction by the way it
generates adverse publicity. Adverse publicity may not adequately reflect the wrong done
– it is determined by the “capricious jury of public opinion” and may be disproportionate
to the seriousness of the wrongdoing.90 This is likely to lead to an understandable sense
of injustice on behalf of the defendant. Furthermore, to the extent that punishing under
the criminal law is justified on the basis of desert, it could be argued that regulatory
offences fail to reflect adequately the culpability of the defendant, and the extent to which
he or she is deserving of punishment.
Looking to the Future: Consumer Protection Offences and their Alternatives
The Unfair Commercial Practices Directive and Criminal Law
Contrasting signals have been given out recently about the extent to which criminal
sanctions will be used in the future in the area of regulatory crime. The need to transpose
the Unfair Commercial Practices Directive (hereafter “the Directive”) into UK law by
12th June 2007 has led the Government to consider the role that criminal sanctions will
play under a new regime. The Directive applies maximum harmonisation to most laws
dealing with business to consumer commercial practices, and will require, at the very
least, that some of the UK’s criminal law consumer protection statutes will have to be
amended so that they fall into line with the Directive.
The DTI’s consultation on implementing the Directive closed only on 8th March
2006, and so it is not yet clear to what extent criminal sanctions will be used to
B Fisse “Publicity as a Criminal Sanction against Business Corporations” at 139. Cited in Fisse and
Braithwaite at 310.
90
24
implement the Directive. However, early indications are that criminal law will continue
to play a role. The DTI has stated:91
“At the time of writing, the Government is not minded to change the current
balance between civil and criminal sanctions. This means that, although much
existing consumer legislation using criminal sanctions will need amending, their
criminal offences will be retained where it is possible and sensible to do so. The
Government would similarly aim to retain existing due diligence defences and
associated enforcement powers.”
It is not proposed to go into detail on the Directive here. It is, however, worth
noting the DTI’s view about the role of criminal offences post the Directive’s
implementation. The DTI argues that some parts of the Directive, such as the general
prohibition in Article 5 and the provisions for dealing with misleading omissions in
Article 7 do not lend themselves to being dealt with by the criminal law. However, it
considers that there may be scope for creating criminal offences to deal with aggressive
commercial practices under Article 8 and Article 9. It also considers that some of the
practices listed in annex 1 might be dealt with by the criminal law, while others might
not.
It is clear from the discussion above that there is some enthusiasm for retaining
some consumer protection offences (albeit in an amended form so that they comply with
the Directive) and to introduce new offences to deal with conduct that previously was
91
Consultation para 158.
25
dealt with inadequately by consumer law. This may not be surprising when it is
considered that the Labour administrations since 1997 have created a large number of
regulatory offences. However, this must be considered against an apparently widespread
recognition that criminal sanctions may not always be the best method for protecting the
consumer. There is enthusiasm in some quarters for examining alternatives to regulatory
offences. Reference has already been made to the Better Regulation Executive’s
discussion paper Regulatory Justice: Sanctioning in a post-Hampton World, which
argues that criminal prosecution “attaches a severe moral condemnation and a criminal
record to a business or individual”, and therefore sees it as important to limit the extent to
which criminal sanctions are used in regulation.92 Regulatory Justice builds upon the
conclusions of the Hampton Report (hereafter “Hampton”). A variety of regulatory
techniques are available, and it is not possible to consider them all.93 However, the
regulatory techniques that could most obviously be used in place of criminal sanctions
will now be considered.
Statutory Notices
Regulatory Justice draws a distinction between statutory notices and administrative
penalties. Statutory notices require businesses either to do specific things, or to refrain
from doing specific things. Examples include improvement notices; prohibition or
suspension notices; works notices and enforcement notices. Failure to comply with such a
92
Better Regulation Executive Regulatory Justice: Sanctioning in a post-Hampton World (BRE undated)
para 1.28.
93
See e.g. R Baldwin and M Cave Understanding Regulation (OUP, 1999) chap 4; S Breyer Regulation
and its Reform (Cambridge, Harvard University Press, 1982); A Ogus Regulation op cit chaps 5 and 7-12.
For discussion of the principal regulatory techniques for delivering consumer protection see P Cartwright
op cit chap 2.
26
notice is generally a criminal offence, with the enforcement authority having to go to
court to secure a sanction. Examples of statutory notices in the consumer protection field
include improvement and prohibition notices that can be imposed for breach of food
safety legislation, and safety notices that can be served under the General Product Safety
Regulations 2005.94 For example, under the 2005 Regulations, enforcement authorities
are empowered to serve a variety of safety notices, namely suspension notices,
requirements to mark, requirements to warn, withdrawal notices and recall notices.95
These are subject to appeal.96 Breach of a safety notice gives rise to criminal liability.
Statutory notices are a useful additional tool for regulators. In some cases, they
more directly tackle the harm in issue than prosecution. For example, if a product is
dangerous because it could pose a risk in certain conditions, the most appropriate
response might be to serve a requirement to mark, which ensures that a product is marked
in accordance with specific information warning of the risks that it might present. 97 A
producer who has placed a dangerous product on the market may also be prosecuted for
such, if the enforcement authority considers it appropriate, but the authority is likely to be
more concerned to ensure that in the future, such products are appropriately marked.
Administrative or Civil Penalties
Statutory notices can be contrasted with administrative (sometimes called civil) penalties.
Administrative penalties are defined by Regulatory justice as “penalties imposed by a
regulator without the intervention of a court, although usually with a right to appeal to a
94
Over 4500 improvement notices and 190 prohibition notices were served by local authorities in the 200304 financial year (Regulatory Justice table 1.1).
95
See in particular regulations 11-15.
96
Regulation 17.
97
This could be achieved using regulation 12(1)(a).
27
court or similar independent tribunal.”98 It is believed that 15 UK regulators currently use
administrative penalties, and they fall into two main types: fixed administrative penalties
and variable administrative penalties. Fixed administrative penalties are used normally
where there has been a technical breach of a regulation. Although the regulator may have
some discretion whether to impose them, they are relatively inflexible, the legislation
prescribing precisely when the infringement has taken place and what sanction will be
imposed. It has been suggested that such penalties “are usually suited to minor, highvolume breaches, involving strict or absolute liability and therefore, little or no forensic
enquiry.”99 Appeal can be either to a court or to a specialist tribunal. Variable
administrative sanctions are also imposed by the regulator, but that regulator has
significant discretion as to the level of sanction that can be imposed.
To some extent, administrative penalties may operate in a similar manner to
regulatory offences. Once the offending conduct is proved, the defendant is subjected to a
financial penalty. These may present similar difficulties to fines; they need to be high
enough to deter undesirable conduct, but not so high as to put traders out of business.
Where they are too low they are likely to be treated as little more than a business
expense. Fixed administrative penalties may be criticized as inadequate from the
perspective of deterrence. Variable administrative penalties can sometimes be criticized
as too low, but also have the potential to be disproportionate.
98
Hampton para 2.83. Baldwin and Cave refer to administrative sanctions which are sanctions that operate
without recourse to the courts. However, they classify improvement and prohibition notices under this
heading (p 112).
99
Regulatory Justice para 3.22.
28
There are, however, differences between administrative penalties and criminal
sanctions. First, enforcement authorities may be more willing to take action under a civil
penalties regime that a regime based on criminal sanctions. Administrative penalties
would, arguably, remove the stigma associated with a criminal conviction.100 Would this
make them less effective as a deterrent? There is some reason to think that it might not.
First, the financial penalty may exceed any penalty that would be imposed by way of fine
by criminal courts.101 Therefore, to the extent that deterrence is based on the level of fine
imposed, civil penalties might work more effectively. Secondly, if enforcement
authorities were more willing to impose civil penalties than they are to seek conviction
(and it is submitted that they would be) this would increase to the likelihood of the
sanction being imposed.102 Thirdly, administrative penalties would not be subject to the
same procedural limitations as regulatory offences, and this would improve the chance of
enforcement action being successful. For example, under the Financial Services and
Markets Act 2000 the Financial Services Authority has the power to impose significant
sanctions upon firms (or individuals) if it is satisfied on the balance of probabilities that
there has been a contravention.103 Khanna argues that civil sanctions is likely to have as
strong an effect upon deterring corporate misconduct as criminal sanctions are. 104 What
administrative penalties generally lack is the element of condemnation associated with
conviction, but if the wrongs in question are not deserving of such condemnation, this
should be welcomed.
100
See D Tench Towards a Middle System of Law (London, Consumers Association, 1981).
The FSA regime provides a good example of this. Shell was fined £17m for market abuse in 2004.
102
It is assumed that the rational amoral calculator will weigh up the likelihood of being punished and the
level of likely punishment on the one hand with the potential benefits from the violation of the other.
103
Sanctions include not only financial penalties in the form of fines, but also restitution orders or even
bans from the industry.
104
Vikramaditya S Khanna “Politics and Corporate Crime Legislation” (2004) Spring Regulation 30 at 31
and “Corporate Criminal Liability: What Purpose Does it Serve?” (1996) 109 Harvard Law Review ???
101
29
Hampton demonstrated strong support for the use of administrative penalties,
arguing that they should be introduced as “an extra tool for all regulators.” 105 In
particular, Hampton saw administrative penalties as playing an important role in deterring
wrongdoing by making it easier to ensure that offenders do not keep the economic
benefits of their illegality.106 Ashworth too has supported alternative approaches to the
criminal law, which he would call civil violations or administrative offences, and which
he sees as providing quick and effective justice. These would generally be punished by
way of fine, and would not attract a custodial sentence. Although they would be subject
to simple procedures, there would remain minimum rights for defendants, such as access
to a criminal court.107 The close relationship between civil penalties and the use of fines
for breach of regulatory offences has been noted. Commenting on regulatory offences in
the context of Canadian law, Dickson J stated that:108
“although enforced as penal laws through the utilization of the machinery of the
criminal law, the offences are in substance of a civil nature and might well be
regarded as a branch of administrative law to which traditional principles of
criminal law have but limited application.”
In some countries there are formal procedural distinctions between criminal law
and regulatory law. For example, the concept of the administrative offence was created in
105
Hampton para 2.86.
Ibid.
107
Ashworth “Is the Criminal Law a Lost Cause?” p 255. Hampton recommended that administrative
penalties should make provision for appeal to magistrates’ courts (Hampton para 2.86).
108
R v City of Saulte Ste Marie (1978) 40 CCC (2d) 353 at 357.
106
30
Germany by the Act of Administrative Offences in 1968. Violations can be penalized by
regulators where they are insufficiently serious to warrant a prosecution.109 The criminal
courts play a role, but mainly in dealing with appeals. Although the term regulatory
offence is frequently used in the UK, such offences are formally part of the criminal law.
The more widespread use of administrative penalties would appear to address many of
the concerns expressed at the use of criminal law in the area of regulation.
Mens Rea Regulatory Offences?
An additional point to consider is whether there is an argument for the retention of
criminal sanctions where a defendant can be proved to have acted with a degree of
culpability, but where the offence may not be viewed as truly criminal. It is submitted
that the criminal law should continue to play a role in dealing with the most serious forms
of wrongdoing. It was suggested above that few, if any, consumer protection offences
could be classed a offences mala in se. On those few occasions where mens rea is
necessary, the courts have tended to limit its effect. There may, however, be a strong
argument for ensuring that enforcement authorities are able to use the criminal law where
traders cause serious harm with mens rea. In some cases, this can be done with the
criminal offences that exist. For example, corporate manslaughter, while difficult to
prove, is recognised. It may be necessary to look at the creation of new offences where it
is felt that conduct is deserving of a high degree of censure.110 As mentioned above, the
109
Sanctions are however significant, with fines reaching up to 500,000 euros.
There is evidence of some regulators using mainstream criminal offences in order to ensure that the
“right message” is given out. For example, the Food Standards Agency has been known to pursue some
cases using the law of conspiracy. There have also been examples of trading standards officers using the
Theft Act 1968 where consumer protection offences appeared inadequate. See David CE Roberts “The Use
of the Theft Act in Trading Standards Cases” (1992) 9(4) Trading Law 205.
110
31
present Government has shown a willingness to use the criminal law in the area of
consumer protection, but has tended to create offences which impose strict liability. It is
submitted that there is a strong argument for having criminal sanctions existing alongside
administrative penalties. If these sanctions required proof of mens rea, and operated in
addition to a regime of administrative penalties, this would address the principal concerns
considered above.
Consistency and Regulatory Structure
An additional concern set out above is that regulatory offences are sometimes enforced in
an inconsistent manner. One reason for this may be the extent to which enforcement is
carried out locally.111 Although there is some coordination of enforcement in the area of
consumer protection, it has been argued that this could go much further. Hampton
recommended that there should be a new central authority which would take lead
responsibility for trading standards at a national level. Local authority trading standards
departments would still exist, but the new body would endeavour to “deliver a more
coherent enforcement network and …improve performance in local authorities around the
country.” The Government recently consulted on the establishment of the new body (the
Consumer and Trading Standards Agency, or CTSA). A summary of the responses the
Government received was published in March 2006. Before this, however, the Chancellor
of the Exchequer announced that the Government would be establishing a Local Better
Regulation Office (LBRO), which will not take on the role of a regulator, but will “work
in partnership with local authorities and the national regulators to deliver a risk-based
111
There are, for example, 203 trading standards departments and 408 environmental health departments.
32
approach to business inspection and enforcement.”112 As a result, it seems that LBRO
will take on some of the roles originally envisaged for CTSA, but will apply these to a
broader range of activities. Other roles envisaged for CTSA will be undertaken by the
Office of Fair Trading, with the OFT becoming “the Champion for consumer
enforcement issues.” Detail is currently very thin, and it is difficult to comment on the
proposals at this stage. Suffice it to say that there is the potential for the new structure to
address some of the concern about inconsistent regulation identified above.
Conclusions
The UK has a long history of using regulatory offences to protect consumers, and there is
a strong case for using criminal sanctions where traders are guilty of substantial
wrongdoing. However, while consumer protection offences may be prosecuted where
substantial wrongdoing exists, few of these offences require proof of such wrongdoing
before the defendant can be convicted. Consumer protection offences bear the hallmarks
of regulatory offences: they impose strict liability, are subject to due diligence defences,
are enforced by specialist agencies which make extensive use of compliance strategies,
target businesses and carry relatively little stigma.
The use of regulatory offences raises concerns. First, there is concern that they
may not be enforced consistently. It is submitted that this can be overstated, and that
mechanisms exist, for example coordination under the home authority principle and by
LACORS, that minimises the effect of this. Nevertheless, there are legitimate concerns
here. Secondly, regulatory offences apply where harm is minor. This is undoubtedly so,
and there are strong arguments that criminal sanctions should not be used in such cases.
112
Reducing admin burdens para 13.
33
Thirdly, levels of sanctioning may not be appropriate. This concern is multi-layered. The
principal concern appears to be one of inconsistent sanctioning. Occasionally sanctions
appear disproportionate, more frequently they appear unduly lenient. However, it should
be noted here, as Baldwin recognises, that “the effects of penal sanctions may extend
very considerably beyond the level of fine imposed.”113 Fourthly, regulatory offences can
be resource-intensive, posing considerable burdens on the court system, as well as on
regulators and business. Fifthly, regulatory offences tend to impose strict liability. Even if
we accept that regulatory offences may not carry the same stigma as more mainstream
offences, there is doubt about the appropriateness of imposing criminal liability without
proof of fault. Put simply, strict criminal liability looks, feels, and may be, unjust, even
with safeguards of prosecutorial discretion and due diligence defences in place. Finally,
regulatory offences may simply not work effectively, particularly as a deterrent. It is
frequently assumed that traders “choose courses of action based on a calculation of
potential costs and benefits” and this is used to justify optimal deterrence based
approaches to enforcement.114 However, it should be remembered that many offences are
not committed in so calculating a manner.
Some of these concerns can be addressed by alternatives to regulatory offences, in
particular administrative penalties. An appropriately constructed and enforced regime of
administrative sanctions would still provide effective deterrence, while reducing the
scope for inappropriate labelling. Where there is compelling evidence of culpability,
criminal sanctions should still be able to be invoked, but the criminal label would be
restricted to such conduct. It is doubtful that Parliament will go this far. However, it is
113
114
Op cit.
See Ramsay op cit.
34
submitted that a two-pronged regime of administrative penalties where moral fault may
be lacking, and criminal liability where it is present would protect the effectiveness of
consumer law, and the integrity of criminal law.
35