The Social Licence for Financial Markets by David Rouch

Author:David Rouch
Language: eng
Format: epub
ISBN: 9783030402204
Publisher: Springer International Publishing

5.1 Norms, Behavioural Norms, Written Standards, the Social Licence and Justice

But before looking at written standards, it is important to draw out a fundamental distinction between the regular behavioural patterns of firms and individuals in financial markets (‘behavioural norms’) and written standards that are deliberately advanced to influence that behaviour towards what is desired by the originators of the standards. There is also a third broad category of norms at work in financial markets: those that are neither written down nor fully reflected in market practice, but which nonetheless influence behaviour, ranging from a sense of moral obligation through to matters of etiquette that are part of a ‘background understanding’ of what is appropriate. Chapter 6 picks up on the interaction of these with behavioural norms and the way written standards are followed (see Sects. 6.​5 and 6.​6).

Chapter 2 touched on the emergence of behavioural norms in groups (see Sect. 2.​4.​1). Behavioural norms are the regularities of behaviour that can be seen in the day-to-day operation of financial life in practice: how people relate, the objects of their transactions and how they are struck, the way staff are employed and promoted and interact with colleagues and staff at other firms, how conflicts emerge and get resolved and so on. Most of these behavioural regularities are not formally enforced by any external body. They are simply ‘the way things are’. They emerge and are shaped by a range of factors, including the cultural environment and, within that, ‘market forces’.

Written standards are, in part, intended to sustain or influence behavioural norms, but they do not single-handedly generate the norms. The recognition of a social licence for financial markets is neither a behavioural norm nor a written standard. However, Chap. 4 suggested that it does express an aspiration about what behavioural norms should be and the outcomes they should produce: just ends pursued in a just manner. Written standards are also social. Social behavioural aspiration lies behind them too. They emerge from social processes and are advanced to influence behavioural norms in the groups at which they are directed. Because of that, it is unsurprising to find an apparent alignment between them and the social licence: as with the social licence, an aspiration towards justice is also the stuff of law and regulation, if not written standards more widely. Both written standards and the social licence recognise things as they are, but reach towards an aspired end.

Consistent with this, the highest duty of English and Welsh lawyers when working with their clients in the financial markets or otherwise is not simply to apply law and regulation, but to uphold ‘… the rule of law and the proper administration of justice’.10 Likewise, the United Nations Basic Principles on the Role of Lawyers talks of lawyers as ‘essential agents of the administration of justice’ and ‘promoting the cause of justice’, stating that, in doing so, lawyers should ‘seek to uphold human rights and fundamental freedoms’ under national and international law.11 As noted in Chap. 3,

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