Following on from regulatory defence lawyer Sara George's fascinating excursus on compliance officers' liabilities in the UK (see our PDF editions of March and April), we interview her about some of her concerns in more detail.

The interview was conducted a few weeks ago by Chris Hamblin and is presented in the form of questions and answers.

Q: Do any firms in the UK fail to pay their fines on time?

A: Yes. This does not usually happen with very large firms but the FCA has, on occasion, had to apply to administrative courts and appoint receivers. You only tend to hear about the big fines that are obviously payable by the big banks but there are smaller firms that have failed to pay their fines.

However, there has been some criticism of the FCA because they do not always pursue debts in the way they should because it's very costly and resource-intensive to pursue small debts. It's not their area of expertise and it's not going to get the flattering headlines, so yes, there are firms that don't pay. The sanctions are perhaps not as rigorously enforced as they might be.

Q: Do you deal with regulators other than the FCA?

A: Yes, the Prudential Regulation Authority is the other main UK regulator. Internationally, we deal with the US Financial Industry Regulatory Authority or FINRA, the AMF [the French Autorité des marchés financiers]...there is barely an investigation these days that does not have an alphabet of regulators looking at it. Particularly active are the regulators of the United States. We're beginning to see state regulators like the New York Department of Financial Services getting in on the action when there is money to be had from these big fines.

Q: Offshore regulators as well?

A: Dubai is very common, Qatar is, also Singapore and Hong Kong...who else are we seeing a lot of at the moment? Jersey regulators are increasingly activist now. Barely an investigation has a single regulator involved. Nowadays, nearly everything touches at least two, if not three, jurisdictions. Anything that touches the United States will normally have four or five federal and state regulators.

Q: When the FCA publishes a decision notice that describes the misbehaviour behind a fine, you don't often see much (or any) co-operative involvement from Middle or Far Eastern regulators, do you?

A: No. They haven't been involved in the ones [i.e. the investigations] that have garnered all the publicity. Also, the joined-up approach of [regulators in different countries] putting all the notices out on the same day is very much a trans-Atlantic thing. Other regulators have their own powers – for example, in Italy a large amount of what we think of as regulatory law is in fact criminal law and that seriously impedes the ability of the regulator to do deals, so they will often pursue their own investigation quite independently.

You often see, in big international investigations, those who have criminal investigatory powers such as the Serious Fraud Office and the Department of Justice making common cause and those that are civil regulators, such as the FCA, the CFTC and the SEC, making common cause. The reason is because of the admissibility of evidence. If you cannot use compelled evidence, and there's a serious prohibition against the [US] Department of Justice using criminal proceedings and also the SFO is very careful about getting hold of compelled evidence as well [because] they have no interest in inadvertently contaminating their investigations with inadmissible evidence. So you tend to find that the lines divide along those lines, [between] those who can and those who cannot use compelled evidence.

Q: What is compelled evidence?

A: The most common form of compelled evidence is when a person is compelled to attend before a regulator and answer questions. That's the way in which most FCA evidence is obtained. All but criminal evidence is obtained in that way. So if a person is compelled to attend and give evidence and they are warned that that evidence is admissible against them in all proceedings but not criminal proceedings, they know that they have some protection against the use of that evidence against them in future criminal proceedings.

Q: The regulators must tell them that, must they not?

A: Yes. They have to give you a warning at the start of the interview as to the basis upon which the interview is being conducted. They normally tell you in advance the basis upon which the interview is being conducted by letter. If it isn't in the letter, which it normally is, you can always get a clarification about it. The FCA is very careful about making sure that people understand the basis on which an interview is being conducted.

* Sara George can be reached on +44 20 7329 4422 or at Sara.George@shlegal.com