Alistair Darling, Labour's City spokesman, said legislation was needed urgently to provide a strengthened regulatory system, which can more effectively discipline people and stop them trading, to work in tandem with the criminal law.
The European Commission finding that Mr Saunders's conviction was unfair because he had no right to silence was 'just the latest of a long line of problems which have called into question the ability of the UK to police and prevent City crime,' Mr Darling said.
'The Levitt case and now the Saunders case threaten to throw the law into complete disarray and disrepute.' There would be 'dismay' if Mr Saunders was eventually acquitted by the European Court, Mr Darling said.
Many people now believed there was little deterrence for wrong-doing or bending the rules. A reformed and strengthened Securities and Investment Board should be empowered 'effectively to investigate allegations and if necessary prevent wrong-doers from trading. This system works in the United States.'
Regulators would be able to work faster and more efficiently than the criminal law, using civil standards of proof that there had been wrong-doing on the balance of probabilities, rather than the criminal law test of beyond reasonable doubt.
Wrong-doers could then be stopped from trading. 'The first priority must be to get rogues off the road,' Mr Darling said, 'and that is not happening at the moment.'
The criminal law should be retained and the way in which City fraud cases are prosecuted should be thoroughly re-examined, but a 'judicious blend' of improved regulation and the criminal law was needed.
The Financial Services Act needed to be overhauled to replace self-regulation with direct regulation under a strengthened SIB and changes should be made in the way the Department of Trade conducted inquiries.
'The decision on whether or not to prosecute must be taken by an impartial body,' Mr Darling said. 'Never again should one Tory politician sit in judgement of another.'
He added: 'At the moment there is little chance of City crime being detected, even less chance of prosecution, and those convicted have a good chance of walking free from court.'Reuse content