2. OverviewI. IntroductionII. What is regulation?III. Why regulate?IV. Self-regulationV. Regulation of riskVI. Conclusion
3. Introduction• Many people are under the impression that the UK has a deregulated economy• This perception is inaccurate• The UK has a regulated free market economy
4. Introduction• There are many forms of regulation in both the public and private sectors• Where the public and private sectors meet, there is a clash between different forms of regulation – Regulation by the State – Self-regulation
5. What is Regulation?Traditional regulation is about the governmentor government agencies enforcing rules, withpenalties for non-compliance P. May (2007); “Regulatory Regimes and Accountability” Regulation & Governance vol. 1, pp. 8-26
6. What is Regulation?Regulation is about “sustained and focused attemptsto change the behavior [sic] of others in order toaddress a collective problem or attain an identifiedend or ends, usually through a combination of rulesor norms and some means for their implementationand enforcement, which can be legal or non-legal.” J. Black (2008); “Constructing and contesting legitimacy andaccountability in polycentric regulatory regimes” Regulation & Governance vol. 2, p. 139
7. What is Regulation?• Note that this regulation is not necessarily carried out by the State• Much regulation is carried out by professional bodies and private organisations – They regulate the behaviour of their members
8. What is Regulation? From an economic or business perspective, regulators can decide: – who can enter a market – what prices can be charged – by how much prices can increase – service standardsThis is not necessarily carried out by the State
9. Why regulate?According to the National Audit Office: “The purpose of regulation is to protect the public and the environment and provide a level playing field for business.” NAO (2008); “Regulatory quality: How regulators are implementing the Hampton vision”
10. Why regulate?• Regulation is in place to protect consumers• This could be implemented by the State, or through self-regulation• Thus, it could be self-imposed upon particular businesses or groups of organisations to set minimum standards – These standards could be about product safety, standards of service delivery, membership requirements, etc.
11. Self-regulation• This is seen as the preferred form of regulation by the private sector• It is perceived to be more effective, less burdensome, and more flexible• It is also seen to be more responsive
12. Self-regulationSelf-regulation “involves the regulation of theconduct of individual organizations, bythemselves. Regulatory rules are self-specified, conduct is self-monitored and therules are self-enforced.” Bartle & Vass (2007); “Self-Regulation within the Regulatory State” Public Administration vol. 85- 4, p.888
13. Self-regulation• Can self-regulation be trusted?• Think about the Financial Services Authority and the regulation of the banks – The FSA is staffed by current and former members of the banking sector!
14. Regulation of Risk“The idea of risk based regulation is to targetboth proactive and reactive strategies inaccordance with the risks a firm poses to theregulators’ objectives.” Baldwin & Black (2008); “Really Responsive Regulation” The Modern Law Review vol. 71-1, p.66
15. Regulation of Risk• Think of different industries in the public-private interface e.g. nuclear industry, education, bio-medical science• What risks might be posed? It is easy to think about foreseeable risks. What about the unforeseen risks?• How do the different bodies prepare for such risks?
16. Conclusion• Regulation is a significant factor in the operations of both public and private sector organisations• There are many regulatory bodies, as well as organisations that perform regulatory functions
17. Conclusion• Office of Communications (Ofcom)• Office of Standards in Education (Ofsted)• Financial Services Authority (FSA)• National Audit Office (NAO)• Environment Agency• Food Standards Agency• Human Fertilization and Embryology Authority• Office of Gas and Electricity Markets (Ofgem)• Office of Rail Regulation
18. Conclusion• A final thought about regulation...• Quis custodiet ipos custodies?• Who regulates the regulatory bodies, or the organisations that co-ordinate self-regulation?