Shedding Light on Non-Financial Risks – a European Survey

Shedding Light on Non-Financial Risks – a European Survey — January 2012

3. The Need for Change in Regulation and Risk Management Practices

Amenc and Sender (2010b) that they should only be used to obtain reparation of losses, not as punishment — financial penalties above and beyond reparation for damages — usually associated with class actions: the idea is to ensure reparations are made, not to punish. There are country divergences that we directly impute to each country’s judicial tradition. France, for instance, appears to be less in favour of class actions than average. The United Kingdom is more in favour if the goal is a fair compensation, but even more opposed than France if penalties are involved. Luxembourg and Ireland, on the other hand, are more in favour than average, irrespective of whether there are penalties. Both the United Kingdom and the Germany, Austria and Netherlands group appears to be significantly less favourable to the substitution of national class actions by some brought forward to a pan-European authority.

of the commercial and civil legislative arsenal – a set of laws which are far more heterogeneous across Europe than the implementation of EU financial laws. Thus, the question is whether a European entity has sufficient powers to ensure enforcement beyond financial regulations and into all regulations related to the case. Opinions are divided on the judicial powers of investors We investigate the themes of class actions, divergence of national laws, and role of an international savings authority or financial ombudsman. Overall, a majority of respondents (70%) agree that investors should be able to launch class action suits to get fair compensation (16% disagree). However, only 37% agree that those class action suits should allow for penalties on top of the fair compensation (36% disagree). This echoes the criticism of class actions that they forces deep pockets into settlements of baseless claims, and the proposal in

Figure 3.6.1: How much do you agree with the following regulations on the judicial power of investors regarding non-financial risks?

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An EDHEC-Risk Institute Publication