Correspondence: Alan Dignam, Reader in Corporate Law, School of Law, Queen Mary, University of London, London, UK. Tel: +44 (0)20 7882 5141; Fax: +44 (0)20 8981 8733; E-mail: a.dignam@qmul.ac.uk

¹is a Reader in corporate law at the School of Law, Queen Mary, University of London. His major research interests are company law, corporate governance and the application of Constitutional Rights/Human Rights to corporations. He has authored numerous research papers and books in these and other related areas.

Received 18 December 2006; Revised 18 December 2006.

Abstract

Until very recently the financial services sector in the UK operated in a unique self-regulated environment. If a problem arose, as it did from time to time, then interested industry bodies such as the London Stock Exchange would be expected and indeed would step in to provide a solution. The system had many critics but a combination of the success of the financial services sector and a cooperative government kept the system in place. Over the past decade, however, the UK's unique form of self-regulation in the financial services sector has been systematically dismantled. Since 1997 the combination of the election of a Labour government with a less trusting view of the industry and a number of scandals have led to the state taking regulatory control of the area. This paper is both an account of the dismantling of the self-regulatory system where it has affected corporate governance issues and an argument that the self-regulatory system in the UK has played an important role in past British economic success which may have been underestimated in the haste to reform.