Chapter 4

What circumstances might justify the use of civil pecuniary penalties?

4.1The arguments for including civil pecuniary penalty regimes in statutes have not always been well articulated. Also, some of the justifications that have been used have a more solid foundation than others. In this chapter we set out the generally espoused arguments that favour inclusion of a civil pecuniary penalty regime and we assess the validity of those arguments.

4.2To the extent that they have been articulated, the factors that may lead to the introduction of such a regime are:

• The nature of regulatory law. Included under this heading are the following arguments:
  
  – Civil pecuniary penalties are a useful addition to the regulatory “toolkit”.
  – They are effective at deterring corporate offenders.
  – They can be more appropriate than criminal penalties for regulatory contraventions.
  – The compromise inherent in civil pecuniary penalties is justified where participants have voluntarily entered a closely regulated industry.
  – They can act as a proxy in areas where it may be unlikely that individuals will exercise their own rights to civil remedies.
• Civil pecuniary penalties may be appropriate where the offending is less serious.
• Civil pecuniary penalties are easier to prove and so offer efficiencies and cost savings when compared to criminal proceedings.
• Civil pecuniary penalties may be desirable because of the need for international alignment.
• They build on precedents in other regulatory regimes.

4.3Below, we assess these justifications in turn.