Chapter 5
Role of pecuniary penalties


5.63In the Commission’s view, pecuniary penalties have a potential role where they will be an effective and efficient penalty and deterrent to law-breaking; where the practical considerations support their use; and where the nature of the harm and conduct involved in the offending is such that the public would support a non-criminal penalty. This last factor will always involve a question of political and ethical judgment.

5.64In the policy material about pecuniary penalties to date, there has been little express debate about this political and ethical judgment. We consider that it is central to the debate about pecuniary penalties. In any circumstances, where it is proposed that a form of penalty should be included in a statute, all the factors that influenced the decision as to which penalty is preferred over others need to be clearly and robustly expressed and argued.

A cautious approach

5.65While the Commission has reached the view that pecuniary penalties can play a useful role in these circumstances, we emphasise the need for a cautious approach.

5.66In the first place, the procedural rules and protections that presumptively attach to pecuniary penalties should reflect the need for caution. These will be addressed in the following chapters. To illustrate, a feature of the design of pecuniary penalties is that they tend to have very high maximum monetary penalties. It appears to the Commission that that practice has grown up fairly unchecked. It has been driven by the emphasis on the need to deter breach by the largest corporate bodies.

5.67It should not be assumed that very high monetary penalties are a defining feature of pecuniary penalty regimes, and they should not be adopted as a matter of course. The level of maximum penalty needs to be properly justified in light of the context, conduct and type of potential contravener.103

5.68Upfront acknowledgement and caution is also needed about the risk of unfair treatment of different types of offenders. The greater use of pecuniary penalties may lead to the perception and reality of differential treatment of white collar contraveners compared to “traditional” offenders. Parliament should be guided by the principle that like conduct should be treated alike: that is, instances of the same type of law-breaking should be treated in the same way, whether committed by a banker or a beneficiary. The risk of unfair treatment makes it particularly important for legislative proposals for pecuniary penalties to tackle head-on the value judgments that are being considered, so that they can be debated openly. In particular, pecuniary penalties should not be adopted wholesale into corporate law (or any area of law) without adequate consideration and debate as to whether the conduct targeted is viewed by the general public as worthy (or not) of criminal condemnation.

5.69The Commission also cautions against unnecessary growth in the number of pecuniary penalties on the statute book. In principle, no form of penalty should be introduced into law without sound justification. Parliament should feel no less cautious about the introduction of pecuniary penalties than it has previously about criminal penalties. The proliferation of criminal offences on the statute book has led to concerns about protecting the rule of law and preserving the powerful stigma of the criminal law. But those concerns do not justify the wholesale uptake of pecuniary penalties. Although some offences on the statute book may be better dealt with by way of pecuniary penalty, any proposal to increase any penalty on the statute book should be carefully considered.


G3 There should be robust reasons for employing pecuniary penalties in any regime

Pecuniary penalties are one of a range of penalties that policymakers can include in legislative regimes, along with criminal offences and infringement offences. Any decision to employ one or more of those penalties in a statute should be based on a robust and transparent assessment of its appropriateness in responding to the particular contravention.

The assessment should take into account the following:

(i) effectiveness and efficiency;
(ii) practical considerations; and
(iii) the nature of the harm caused or the conduct involved.

103See ch 14.