Compliance Strategies, Cara Maguire

Compliance Strategies

OECD Training Workshop on Regulatory Impact Assessment

November 2014

What is regulation?

“A rule with which failure to comply would result in coming into conflict with the law”

Regulatory Compliance

• Identify who is responsible for enforcement

• Consider Principles of Good Regulation and Hampton Principles

• Outline aims and timetable for implementation

• Identify stakeholders and plan communication

• Consider risk management for delivery

• Consider how this will fit with existing initiatives

Treatment of Enforcement in Impact Assessments

The UK’s better regulation framework is based on the Hampton Principles:

Less regulation, better regulation, and regulation only as a last resort

Good regulation should be:

• Transparent

• Accountable

• Proportionate

• Consistent

• Targeted at cases where action is needed

What does ‘better’ enforcement look like?

The enforcement of regulations affects businesses at least as much as the policy of the regulation itself. Efficient enforcement can support compliance across the whole range of businesses, delivering targeted, effective interventions without unreasonable administrative cost to business. Inflexible or inefficient enforcement increases administrative burdens needlessly, and thereby reduces the benefits that regulations can bring… entrenching the principle of risk assessment throughout the regulatory system, so that the burden of enforcement falls most on highest-risk businesses, and least on those with the best records of compliance” Reducing administrative burdens: effective inspection and enforcement, Hampton Review 2005

Enforcement is about proportionality

Administrative burdens • Familiarisation with administrative

requirements • Record keeping and reporting

Policy costs • Meeting or complying with the regulations • Recur while the policy measure remains in

force

The cost of Compliance

Effective enforcement is crucial to success of the proposal – risk assessment

Compliance – considerations in cost-benefit analysis

When calculating enforcement costs these should be based on a realistic assumption of likely compliance and capture impacts on both business and regulators. Regulatory proposals: • Estimation of costs assume

100% compliance • Where the regulation enforces

current requirements we don’t count the cost of compliance with the original regulation (non-compliant persons are breaking the law!)

Deregulatory proposals: • Estimation of benefits based on

actual compliance levels (need to be estimated)

Compliance Strategy

The Key Questions: • Who will enforce the policy? • Does the issue being addressed through the policy impact nationally

or sub-nationally?

• What skills, expertise or experience will be needed to enforce the policy?

• What resources can support enforcement of the policy?

Case Study - Compliance

National Minimum Wage About: • Sets a wage floor • Provides protection to low-income workers by avoiding

potential exploitation of low paid workers

• Prevent employers from abusing unequal bargaining power to pay unacceptably low wages

- Lack of skills - Lack of mobility - Lack of opportunities

Case Study – National Minimum Wage

Compliance strategy – all workers who are entitled to the NMW should receive it • Awareness of rights and

obligations • Access to assistance and

information

• Support for workers

• Ability to comply

• Believe that it is better to operate within the system than outside the system

Case Study – National Minimum Wage

Success • Widespread understanding of the proposal • Flexible compliance regime • Capacity to respond swiftly to tackle non-compliance Enforcement • Respond to complaints • Visit employers identified through risk assessment • Workers may also make a complaint to an Employment

Tribunal • Required to pay arrears to their workers and may be subject

to a penalty

1 Victoria Street, London SW1H 0ET

Tel: 020 7215 1460

E-mail: regulatoryenquiries@rpc.gsi.gov.uk

www.independent.gov.uk/RegulatoryPolicyCommittee

http://discuss.bis.gov.uk/focusonenforcement/published-reviews-and-closed-focus-areas/

RPC Contact details