Restorative justice: a way forward with the banks?
Aug 14, 2012
There are calls to prosecute and imprison individuals, rather than merely fine the companies, but putting them in the dock is expensive and they can often use legal technicalities to avoid it. It does little for the victims over and above the compensation which the bank is paying anyway. So what can be done?
We can get a clue from Australia. Around 1990, a big insurance company mis-sold insurance to Aboriginal communities - sounds familiar? Instead of the companies being prosecuted and fined, their top management was persuaded to visit the communities and meet the victims face-to-face. Some of the executives went back to the city deeply ashamed of what their company had done. Policy holders were compensated, and an Aboriginal Consumer Education Fund established.
It was found that many others had been ripped off, including members of a police union - some 300,000 victims, ending with a payout of A$50 to 100 million. This benefited far more victims than prosecution would have done. (See J. Braithwaite, Restorative justice and responsive regulation, OUP 2002, pp. 22-24). Braithwaite maintains that there is a better chance of finding individuals among top management who would respond to meeting face-to-face with the human victims of their actions than of scaring them into compliance.
The idea is picked up in a report by Professor Richard Macrory CBE, QC, of University College London, Regulatory justice: Making sanctions effective. Final report (Better Regulation Executive, 2006). He recommends the use of restorative techniques in cases of regulatory non-compliance: 'Victims will often be very raw and sensitive about the physical, emotional or financial harm that has been inflicted upon them.
Offenders, on the other hand, will often be very nervous about facing those they have harmed. Furthermore, the result of an RJ event will be an agreed remedy for the harm that has been caused. The agreement could amount to a significant burden on the offender, for example financial compensation or a commitment to undertake unpaid work' (para. 4.40).