“Big firm” executives are rarely held accountable for economic crime, financial wrongdoing, and/or regulatory breaches.

A major review published today by Spotlight on Corruption shows that senior executives at the helm of large British companies that engage in economic crime, financial wrongdoing, or regulatory breaches almost never face any consequences.  

The new report reveals:

1. All the top bodies responsible for prosecuting serious economic and financial crime are struggling to land prosecutions against senior executives in large firms, effectively putting them beyond the law.
2. Just 6% of investigations under the government’s flagship Senior Managers regime, introduced in the wake of the financial crisis to hold bank bosses to account, have resulted in any enforcement action whatsoever.
1. The Competition and Markets Authority (CMA) failed to prosecute any board-level senior executives in large firms following 11 prosecutions;
2. The Serious Fraud Office has achieved just two convictions following 20 corporate enforcement actions and
3. The Financial Conduct Authority (FCA) took just one regulatory action against an individual following 17 fines on banks (worth a total of £777 million) for money laundering.
3. Directors from small and medium-sized enterprises (SMEs) are far more likely to face conviction, regulatory fines, and bans than senior executives in large firms.
4. Regulators often see SMEs as “low-hanging fruit.” Large firms are likely to face lower corporate fines relative to turnover than SMEs.

Dr Susan Hawley, Executive Director of Spotlight on Corruption, said:

• “After every corporate scandal, from the financial crash to the Post Office, there are rightly calls for senior executives to face accountability – but this rarely happens.
• Whether it’s Airbus’ global bribery scheme or NatWest’s money laundering, senior executives evade any responsibility.
• This lack of accountability is bad for British business, the UK economy, and the British people.”

The UK government recently dropped plans to introduce corporate governance reforms and is consulting on whether to reform the senior managers' regime.

The report finds that the UK is becoming dangerously out of step with the USA, which has much stronger enforcement against directors and is expanding bonus clawback in light of evidence about its positive impact on corporate governance and business growth.

The report lays out nine crucial recommendations to improve senior executive accountability in the UK. These include introducing a new criminal offence to help bring senior executives to justice when their company engages in economic crime and creating a task force to ensure the different regulators work together to develop a coherent prosecution strategy.

The senior executive's report

• Dr Susan Hawley and Dr Daniel Beizsley wrote the new report Power Without Responsibility: The State of Senior Executive Accountability for Economic Crime in the UK Today.
• It examined four different forms of senior executive accountability for economic crime in the UK: prosecution, regulatory action, disqualification, and removal of directors’ benefits.
• The report's implications will be discussed in Parliament at an event on Wednesday, February 7th, at 5 p.m., hosted by the APPG on Anti-Corruption & Responsible Tax and chaired by Dame Margaret Hodge MP.
• According to recent polling by the UK Anti-Corruption Coalition, https://www.ukanticorruptioncoalition.org/work/report-reflections-economic-crime
• 42% of the UK public associates economic crime with senior executives of big business—almost on a par with oligarchs and kleptocrats.
• Last year’s Ipsos Veracity Index noted that just 30% of the UK public trusts business leaders to tell the truth. https://www.ipsos.com/en-uk/ipsos-trust-in-professions-veracity-index-2023

The executive summary and the full report can be downloaded using the links below.

• Executive summary https://www.spotlightcorruption.org/wp-content/uploads/2024/02/Spotlight-Power-Without-Responsibility-exec-summary.pdf
• Full report -  https://www.spotlightcorruption.org/wp-content/uploads/2024/02/Spotlight-Power-Without-Responsibility-full.pdf