The strengths and weaknesses of self regulation

Dr Jon Bell

Formerly Chief Executive

UK Food Standards Agency

The case for and against command and control regulation (1)

• Define required behaviour

• Set standards

• Clearly set out offences and penalties

The case for and against command and control regulation (2)

• Blunt instrument

• Can be costly and act as a brake on innovation

• Always follows new activities, never precedes them

• Only sets minimum standards

Aims of self regulation

• Ensure a properly functioning market

• Ensure a responsible industry

• Ensure a commitment to published standards

• Effective action in the event of a breach

• Easy and low cost to administer

• Responsive to change

Advantages and disadvantages

• Possible advantages:– Driven by those being regulated– Embeds responsibility for compliance– Flexible– Low cost

Advantages and disadvantages

• Possible disadvantages– Conflicts of interest– Lack of confidence in the process– Weak sanctions– Lack of transparency– Narrowness of interpretation of the rules

Drivers (1)

• Industry:– Threat of command and control regulation– Name and shame by the authorities– Desire to raise standards and confidence– Desire to prevent damage by rogue operators

Drivers (2)

• Government:– Desire to keep costs down– Enables minimal government interference– Maximises flexibility– Strengthens corporate responsibility

Suitability for different sectors

• Required standards of behaviour are well understood

• No risk of serious or widespread harm

• Industry cohesiveness and maturity

• Competitive market

Ways of avoiding or reducing the disadvantages (1)

• Involve outside parties

• External policing

• External auditing

Ways of avoiding or reducing disadvantages (2)

• Clear and transparent rules

• Allow group action by consumer bodies

• Clear appeals procedures

Examples of sectors in the UK which have tried self regulation

• Successfully– Advertising– The medical profession– The press

• Unsuccessfully– The police– Lawyers– Gas safety

Perceptions about self regulation

• The public

• Politicians

• Industry

Issues requiring particular attention

• Funding

• Expertise and background of independants

• Transparency

• Speed of response

• Appeals system

• Mandatory participation?

Conclusions

• Workable alternative to command and control regulations in appropriate circumstances

• Not suitable for all sectors

• Perceptions are all important