Q: What broad assertions have you heard institutions making about their legal professional privilege? And I mean the assertions that don't wash, the assertions they make when they're trying it on. What do they say?

A: They were, a few years ago, making extremely broad assertions! Everything ? Is he giving legal advice or compliance advice? Is the bank (or the firm) in question entitled to withhold his advice by saying that it's legal professional privilege? Are individuals in the firm unable to mention it or refer to it because it's legal advice? It rather undermines the idea of a compliance officer as a person who is accountable to a regulator as well as to the regulated.

Q: That could be good, though, because compliance with regulations does not always save the bank from being hit with a writ for negligence. A compliance officer who could see that coming as well as bad regulation could be valuable in some circumstances!

A: I think part of the problem has been that 'compliance' has typically been seen as just a cost centre rather than as a necessary risk function. That, frankly, may have undermined compliance officers' ability to do very much, or even to control the excesses of some particularly lucrative teams.

Q: Does the regulator have good expert witnesses?

A: No. it finds it almost impossible to get excellent expert witnesses. Most experts would rather be on the defence side.

Q: So expert witnesses are not irrelevant to either side of the case.

A: No. There are some types of case that I don't think the FCA could prove without an expert, particularly on the market manipulation side certain types of complex structured products and things like that.

Q: So when an expert witness appears, he's either talking about an instrument that only three people in the country understand or he's talking about profiles of people's behaviour.

A: The standard is, for example, what sort of standard would you expect of a senior manager in this position. The real difficulty, I think, is going to come up in the FX and Libor cases. The people who are the suspects are the experts. They're the only people who really knew what was going on. You're not going to be able to find someone who's going to be able to give evidence about what was meant or what was being done, because he wasn't in that market at that time. So experts are a problematic area for the FCA.

Q: What happens when you are on the other side? How do you make the compliance officer's life a misery when you are represent a trader?

A: Very often, there's no incentive to make the compliance officer's life a misery. It's very unlikely that he's ever going to give evidence that is favourable to your client and the more hostile you are the more attention you might draw to the shortcomings in your own case. So, very often, all you want to do is to show that somebody raised concerns or was seeking advice and no more than that. There is no advantage to creating a hostile relationship if you don't need to, so generally I don't.

Q: The by-product is misery, though, in the end.

A: Yes.

Q: Because the compliance officer then has to deal with the allegation that he's asked a straightforward question and didn't give a straightforward answer.

A: Yes. What you would be trying to show if you were a trader is that you were constantly raising and elevating concerns and matters and they weren't being addressed or that you were constantly being told to shut up and get on with it or nobody was taking you seriously. That's what you need to show – that you were constantly raising concerns and, basically, that the compliance function failed.

* Sara George can be reached on +44 20 7329 4422 or at Sara.George@shlegal.com