Corporate governance is not the only defence against abuse by insiders; there are also legal restraints, for example there are laws to prevent fraud and ensure minimum standards of health and safety in the 3  workplace. But it is not realistic to expect the legal system alone to prevent all possible abuses by insiders; this would be very costly and cumbersome.
Hence there is a need for standards of corporate governance which extend beyond the strictly legal obligations of a firm. The banking industry presents unique challenges for corporate governance because the scope for conflicts of interest between insiders and outsiders is larger than in many other industries. The scope for conflicts of interest arises for several reasons.