Law Commission to examine identification doctrine for economic crime

The Government has published its response on the call for evidence on corporate liability for economic crime. The response summarises the work done to date, and the key reform options of:

• law to replace common law rules;
• a new form of vicarious liability along the lines of the US model;
• a new strict liability offence along the lines of the Bribery Act offence;
• a variant on the failure to prevent model; and
• an investigation into the scope for further regulatory reform.

There was no clear consensus of responses, with many being unclear on quite which new offence should be created and some opposing reform on the basis that a new offence would stifle growth and competition, while others questioned the need for further criminal sanctions at all. Overall, therefore, the Government found no overwhelming pressure to change the law – even though more than half the respondents felt the existing framework did not provide sufficient deterrent to corporate misconduct, and 75% agreed the “identification” doctrine inhibits holding companies to account, and most of them agreed the only way to fix this was to create a new criminal offence.  A significant majority of respondents also felt that a purely regulatory response was often not appropriate. The responses for the options for a new offence slightly favoured mirroring the Bribery Act offence.

So despite the evidence suggesting that at least the majority of respondents think reform is required, even if they did not agree on the precise nature of it, the Government says the results of the call for evidence are inconclusive. It therefore sought more views to make a deeper assessment of the current issues and to more clearly define the scope of any new offence.  At the end of all that, it is now commissioning the Law Commission to undertake a detailed review of the identification doctrine, with a particular focus on economic crime. It also notes that, by the time the Law Commission reports, we will have had a better chance to see how more recent developments than s7 (in particular the FTP tax evasion offences and the effects of the SMCR) have made a difference.

The Law Commission has also published the terms of reference for its project.  It aims to publish its Options Paper in late 2021.