When Good Faith is Not Good Enough

Abstract

As the global economic crisis makes its mark, regulators and courts are sounding off with one message coming through loud and clear, ‘flout the rules, pay the penalties’. In-house counsel, compliance officers and their outside lawyers are responding, forging a new culture of accountability and transparency and changing information governance and eDisclosure policies and practices for good. In July 2009 the Financial Services Authority (FSA) published plans to create a consistent and more transparent framework for calculating financial penalties which could mean some fines treble in size. Margaret Cole, director of enforcement at the FSA, stated the following, "By hitting companies and individuals in the pocket where it hurts, the fines will be a stark warning to others on what they can expect to pay for flouting our rules.” Over 40 new regulations have come into effect in the last year, for example COBS 11.8 in the UK (requires financial services firms to retain client-related telephone conversations). Parties to disputes are experiencing costly consequences and unsolicited media attention for failing to comply with the law, the rules of civil procedure governing disclosure, as well as data privacy and protection statues.