Understanding Regulation

Facts, Analysis and Comment

Effectiveness Reviews

The Governing Boards of regulatory bodies will wish regularly to review the effectiveness of their organisation. When doing so, it is helpful to consider the following questions:

1. Resource Allocation

Does the organisation divide its resources appropriately between its three key functions?

Enabling – licensing/permissions to carry out certain activities.
Policing – enforcing compliance with legislation/regulations.
Advising– providing guidance to help entities understand and comply with legislation/regulations.

2. Over- or Under-Regulation?

Does the organisation achieve an appropriate balance between over- and under-regulation?

Under-regulation leaves too many loopholes that producers can avoid or evade

Over-regulation provides incentives to evade regulation, including

Note that:-

3. Contradictory Pressures

Has the organisation discussed and chosen appropriate responses to the contradictory pressures identified by Harvard's Professor Sparrow in his book The Regulatory Craft?

“Regulators, under unprecedented pressure, face a range of demands, often contradictory in nature:

4. Independence

Is the organisation satisfied with the extent of its independence from government?  The following indicators may be relevant:

A more detailed discussion of this subject may be found here.

5. Accountability

Is the organisation sufficiently accountable for its decisions:

Note that accountability involves explaining why the regulator has taken its key decisions.  
It does not mean 'obeying orders' - other than those contained in legislation and legal decisions.

A more detailed discussion of this subject may be found here.

6. Effective Regulation: Larger Organisations

Do senior staff understand the cultural and behavioural pressures that can cause catastrophic failure in the regulatory compliance of larger organisations?  These might include:

A detailed description of these pressures can be found here.

7. Effective Regulation - Individuals & Smaller Organisations

Has the organisation developed a suitable range of relationships with the individuals and smaller organisations within the various elements of the typical regulatory spectrum: 

  A more detailed discussion of these questions may be found here.

 

Martin Stanley