Risk Science or Realpolitik: What Is Driving the Worldwide Boom in Conduct Regulation?

Roger Miles writes about conduct control, risk enforcement and “behavioural enforcers,” and financial regulation.

In the month when senior financial managers in the United Kingdom become targets for new forms of prosecution, we should remember that it has actually been just three years since the Financial Conduct Authority (FCA) led the world as the first financial conduct regulator. Yet, within the past year alone, competition for thought leadership in conduct control has ramped up significantly; the FCA itself is now being chased by newer, faster-moving “behavioural enforcers” in other countries. So-called behavioural regulation has been a surprise hit, as conduct risk enforcement has become a gold rush for governments. With modes of enforcement now changing rapidly, it’s worth recalling how this all came about.