Annex 2 - Hampton and Macrory Reports
Hampton Review
(March 2005)
The aim of Hampton's
report is to identify ways to:
- Reduce the
regulatory burden; and
- Maintain or
improve regulatory outcomes.
The findings break
down the improvements into 5 key areas of the regulation process.
A good regulator should be successful in doing the following:
1. Risk
Assessment - concentrate resources on areas that need them
most (particularly inspections / investigations etc). This should
mean that regulation places the greatest burden on the non-compliant;
2. Advice
and guidance - increase the probability of compliance through
authoritative and accessible advice;
3. Form
Filling - simplify / minimise the form filling process and
streamline the volume of data that the regulated must supply;
4. Penalty
Regimes - create deterrence through proportionate and meaningful
sanctions; and
5. Regulatory
Structures - simplify the structure of regulation (e.g. reduce
overlapping regulatory jurisdiction).
It is also recommended
that regulators should have a performance management framework
and systems in place to monitor the impact of changes on those
they regulate.
Macrory Report
(November 2006)
This was designed
to identify a set of flexible and proportionate sanctioning tools
that can be used by regulators to achieve more effective regulation.
This follows on from Hampton's findings that many penalty regimes
are cumbersome and ineffective.
Macrory found that
many regulators are heavily reliant on one tool - criminal prosecution.
This is problematic as:
- The sanctions
imposed are often insufficient;
- Criminal prosecution
may be a disproportionate response (e.g. where non-compliance
was unintentional); and
- Criminal sanctions
are costly and time consuming for all parties. The regulators
may be deterred from using their powers which creates a compliance
deficit.
Macrory's solution
1. The government
should initiate a review of the drafting and formulation of criminal
offences relating to regulatory non-compliance (to clearly distinguish
between matters of regulation and criminal offending).
2. In the design
of appropriate sanctioning regimes there should be regard for
the following 'Penalty Principles' and 'Characteristics'.
Six Penalties
Principles
A sanction should:
1. Aim to change
the behaviour of the offender;
2. Aim to eliminate
any financial gain or benefit from non-compliance;
3. Be responsive
and consider what is appropriate for the particular offender and
regulatory issue, which can include punishment and the public
stigma that should be associated with a criminal conviction;
4. Be proportionate
to the nature of the offence and the harm caused;
5. Aim to restore
the harm caused by regulatory non-compliance, where appropriate;
and
6. Aim to deter
future non-compliance.
Seven characteristics
of a successful sanctioning regime
Regulators should:
1. Publish
an enforcement policy;
2. Measure
outcomes not just outputs;
3. Justify
their choice of enforcement actions year on year to stakeholders,
Ministers and Parliament;
4. Follow-up
enforcement actions where appropriate;
5. Enforce
in a transparent manner;
6. Be transparent
in the way in which they apply and determine administrative penalties;
and
7. Avoid perverse
incentives that might influence the choice of sanctioning response.
3. The effectiveness
of the criminal courts for regulatory offences should be increased
via:
- Sentencing
Guidelines Council should prepare guidelines for cases of regulatory
non-compliance;
- Prosecutors
should make clear to the court any financial benefits resulting
from the non-compliance;
- Prosecutions
in particular regulatory fields could be held in designated Magistrates'
Courts (i.e. to build up court level understanding of the regulations);
and
- Regulators
should provide specialist training to prosecutors.
4. Fixed and
Variable Monetary Administrative penalties should be available
to regulators who are compliant with the Hampton and Macrory principles
and characteristics (particularly risk assessment) and there should
be an appeals mechanism in respect of these.
5. Statutory
notices should be considered as part of an expanded sanctioning
toolkit.
- They should
be systematically followed up using a risk based approach; and
- Administrative
penalties or criminal proceedings should be available where the
notices are not complied with.
6. The government
should consider the use of Enforceable Undertakings as an alternative
to criminal prosecution.
7. Pilot schemes
should be considered for Restorative Justice.
8. Alternative
sentencing should be available to criminal courts - Profit Orders,
Corporate Rehabilitation Orders, Publicity Orders.
9. Transparency
and Accountability should be improved via
- A Better Regulation
Executive working group of regulators / departments to share best
practice; and
- Each regulator
should publish a regular list of its completed enforcement actions.
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