Punishment, Prestige and Protection: Reputational Sanctioning in Consumer Protection Law and Policy

The research will investigate the use of reputational sanctioning (the use of negative or adverse information by regulators) in consumer protection law and policy and make recommendations for its future. It will be argued that reputational sanctioning presents fascinating and significant opportunities for regulators, but that it also carries substantial risks. The work will set out clearly how these opportunities can be realised, and risks can be managed.

A good deal has been written about how the law can, and should, discipline firms (and, sometimes, individuals) for wrongs towards consumers. This punishment has several objectives, including to deter wrongdoing, to raise trading standards, and to signal disapproval. Sanctioning in the UK was traditionally carried out via fines and (occasionally) imprisonment for breaching regulatory offences. Although there is no agreed definition of regulatory offences, they typically: impose strict liability; apply only to activity in the course of a trade or business; are subject to due diligence defences; are prosecuted in the magistrates court; and carry relatively little stigma. There is a range of evidence to suggest that such offences had limitations as a consumer protection tool, and that sanctions imposed under them did not fulfil their objectives. Important and influential reports (most notably Regulatory Justice: Making Sanctions Effective (known as the Macrory Report)) identified systemic problems with regulatory sanctioning, and made suggestions for how these might be resolved.

The Government's principal response was to create the Regulatory Enforcement and Sanctions Act 2008 (the RES Act). This allowed specific regulators to apply for the award of powers for particular purposes. The RES Act provides a fascinating blueprint of the types of sanction that might be used in consumer protection law in future.

Given the enthusiasm with which the Government greeted the Macrory Report, it is surprising that it did not follow the recommendation to create some form of reputational sanctioning. The absence of such a sanction is all the more striking for the following reasons:

1. There is enthusiasm for greater transparency about business wrongdoing from various stakeholders;
2. Initiatives which use forms of reputational sanctioning have been introduced in some sectors, and have received support;
3. Regulatory sanctioning has the potential to harness market forces in a way that other forms of sanctioning may not. This is particularly apt where consumer law is in issue; and
4. There have been criticisms of how regulatory sanctioning is currently used in the UK (see e.g. Effectiveness of Enforcement Regimes, OECD, 2006 p 43).

This research will:

1. Investigate thoroughly and identify clearly the reasons for having a reputational sanctioning regime;
2. Consider thoughtfully the relationship between the rationales for reputational sanctioning and consumer protection law, with particular reference to the notion that consumers (should) exert market discipline;
3. Explain precisely and critique clearly how reputational sanctioning is currently used in consumer protection regimes;
4. Set out convincingly the role that reputational sanctioning might better play in a consumer protection regime in future.

The research will involve detailed doctrinal examination of texts, will display a thorough consideration of relevant theory, and will be rooted in an appreciation of the relationship between substantive law, legal theory and practice. The research will have hugely important implications for regulators, firms, consumers and governments. It will do this by providing a lucid and compelling picture of the opportunities for, and risks in, establishing a system of reputational sanctioning in the UK. The research seeks to have a significant impact upon the effectiveness of regulatory sanctioning, and consumer protection law, both nationally and internationally.

1. Who will benefit from the research?

The research will benefit various stakeholders: policy-makers (including government departments), regulators (including enforcement authorities) firms and consumer groups, both nationally and internationally. The research has significant implications for all jurisdictions that have, or might be considering introducing, some form of reputational sanctioning. It will also benefit my teaching, those benefits being passed on to students. In two modules, I teach many of the 180 plus students on the Nottingham LLM which attracts students from across the globe, many of whom return to influential positions as academics, lawyers and policy-makers in their home countries.

2. How will they benefit?

All stakeholders will benefit from having a clearer picture of the strengths and weaknesses of reputational sanctioning. Government departments and regulators are likely to (a) consider the use of such schemes and (b) use them in practice. They will benefit particularly from the examination of the rationale for such schemes, the explanation and analysis of their use, and the conclusions of how they might be improved. Consumer groups will have a clearer picture of the relationship between the market discipline exerted by consumers, and the kinds of negative publicity generated by regulators. Indeed, given that some consumer groups are potentially co-producers and distributors of negative publicity, the research has particular relevance for their activities.

3. What will be done to ensure they benefit?

The keys are:

a. To make sure that the final publication is of the highest quality: thoroughly researched, lucidly written, and with clear, compelling conclusions.

b. To make sure that they know the research is going on. Some time will be spent talking to stakeholders, and this will be crucial to identifying issues that might otherwise by missed. It will also ensure that those who are most interested in the research know that it is happening.

c. To make sure that they have access to the research findings. Merely publishing an academic article is unlikely to reach a sufficiently wide audience. To address this, I will send copies of the article to key stakeholders. Furthermore, given that an important part of the article will examine the area of financial services, I will utilise the Financial Services Research Forum (FSRF) to ensure that regulators, firms and consumer representatives are aware of the work. I will do this by producing a briefing paper and talking at an FSRF Conference. In addition to that, I will use my affiliate membership of the Trading Standards Institute to reach enforcement officers for whom the work is of particular relevance and interest. I will also write about the work for a broadsheet to ensure the maximum possible impact.


Long before 'impact' became an important part of the REF I have been committed to ensuring that my publications had an influence beyond the academic community. For example:

As a member of the FSRF I regularly meet with, work with, and present to, a wide range of stakeholders. This includes firms, regulators and consumer groups. I have undertaken research funded by the FSRF in the past to our significant mutual benefit.

I am a regular respondent to consultations in my areas of expertise, both as an individual and (previously) as Chair of the Consumer Law Panel of the Society of Legal Scholars.

I spent several years as scientific director of the European Credit Research Institute, Brussels;

For several years I was an active member of the academic advisory board on consumer law reform at the DTI (now BIS).

I have undertaken research for the Law Commission (on corporate crime) and under an ESRC Business Engagement Award (on financial services).

I will continue to use the variety of avenues available to me to communicate