Financial elites, law, and regulation: a historical perspective

This paper takes “elites” as being not just governing body members of financial intermediaries but also that professional class of experts that includes modern financial regulators who have to a large extent displaced the historic and (we would argue) more democratic role of the common law courts and common law principles in ensuring “voice” for the ordinary financial citizen as against the interests of financial elites, whether she is a bank depositor, mutual fund investor or pension saver.

The paper takes the period from the 19th century to the most recent financial crisis and tracks how and why regulatory and legislative responses to episodes of financial crisis and failure – both within individual institutions or sectors and more systemic failures – have come to dominate the legal landscape around financial loss and investor/depositor protection.
It examines the reasons for this insofar as they may lie within the legal system itself. It concludes that the development of the Commercial Court has been a key influence on the fact that legal disputes arising from individuals’ entanglements with and necessary participation in the financial sector are resolved nowadays in ways which reference fundamental principles and values of the common law less frequently. It concludes that the rise of regulatory law and technique in mass retail finance has had the effect of serving the interests of elites and embedding their interests in influencing substantive law and its enforcement.