Cutting Red Tape by Making Consumer Regulation More Effective

Carolyn Bond Co-CEO

Red Tape

“Red Tape” – unnecessary paperwork/regulation

Reduce “red tape” by making regulation more effective

What is Effective Regulation?

For the purposes of this presentation, I have assumed that effective regulation:

Prevents, or reduces, practices that are causing harm to consumers; and

Enables the individual consumer to seek redress

Choosing the Right Tools

Legislation Codes – Voluntary and various forms of

enforceable codes Licensing Criminal Penalties Civil Penalties Innovative approaches such as Unfair Contract

Terms Dispute options – courts, tribunals, industry ADR

Choice of tools depends on range of factors

Type of industry (size, culture etc) Regulator (powers, resources, priorities) Availability of consumer advice/legal services Cause of the problem (industry structure, historical

unfair practices, lack of clarity of laws ) Consumer factors (are these consumers particularly

disadvantaged? – ie fringe borrowers)

Getting the structure right

Identify the weak links in the regulatory structure: Penalties (or risk of being caught) not great

enough to discourage conduct; Regulator not taking action; Complaints/disputes process not accessible; Complaints/disputes are not being used to identify

and address systemic problems; Regulation is not enforceable; Industry is actively avoiding the regulation (ie

finding loop-holes).

Discussion

Identify one example of consumer regulation that you believe is particularly effective or ineffective.

Identify the factors that impact on the effectiveness of this regulation.