Smoke and Mirrors? Disqualification, Accountability and Market Trust

The Small Business, Enterprise and Employment Act introduces reforms to the regime for disqualifying company directors in England and Wales, aimed at restoring market trust in the financial services market and in business generally, by increasing the accountability of company directors. This article examines whether disqualification is an appropriate tool to achieve these goals. It considers the different forms of trust and trustworthiness that regulation can promote, and how. It argues that disqualification is a poor means of promoting intrinsic commitments to trustworthiness which would provide the greatest protection to market participants, and may have limited impact in encouraging trustworthiness for extrinsic reasons. Importantly it is a poor tool for addressing the loss of trust in the financial services market and the present focus on disqualification deflects attention from more pressing questions, namely how best to promote accountability of directors both in financial institutions and in dispersed share-ownership companies generally.