Recommendations
16. The recommendations have been ordered by
reference to four categories: those related to the Government's
and Parliament's responsibilities for the regulatory framework
as a whole, and those related to the three specific elements of
accountability which control the regulators, being the duty to
explain, exposure to scrutiny and the possibility of independent
review.
The overall regulatory framework
(1) Independent consumer bodies should be obliged
by statute to engage in open meetings and conduct regular surveys
of consumers. This has resource implications which should be met
out of public funds. Following a review of the budgetary arrangements
for each regulator, an appropriate formula should be agreed for
calculating this provision and applied to each of these bodies.
We believe that these changes will enhance both the accountability
and the independence of the consumer bodies. (para 69)
(2) We are aware that the Government is undertaking
a review of consumer bodies, supported by the National Audit Office
(NAO), and recommend that the review includes an examination
of the relationship between regulators and the related consumer
bodies in order to introduce greater clarity in the relationship,
if necessary through a statutory provision common to the regulatory
regime.
(para 70)
(3) We welcome the move towards more collective
board structures, rather than sole regulators, as one of the principal
mechanisms for improving the quality and consistency of regulatory
decision-making, and urge that this should be the norm for regulatory
regimes. To ensure that there is no loss of accountability we
recommend that boards designate one of their number as the public
face of the regulator in order not to lose engagement with the
public and to perform the role of building confidence and understanding.
Normally this should be the Chairman or Chief Executive. Where
appropriate open meetings should be held as a means of increasing
public understanding and confidence. (para 110)
(4) Government should explicitly accept overall
responsibility and accountability for regulatory policy and the
regulatory framework, while devolving responsibility under defined
circumstances to independent regulators. (para 122)
(5) Ministers should remain responsible for appointing
regulators, subject to Nolan rules, to ensure proper responsibility
and accountability. (para 126)
(6) Regulatory legislation should normally be
drafted in the light of consultation with regulators to achieve
clearly defined objectives. The duties imposed on regulators should
be consistent with the overall remit of the regulator (for example,
economic regulation). They should make clear the underlying purpose
of the regulator's role (such as consumer protection). (para 130)
(7) Responsibility for environmental and social
standards should normally remain with Ministers as the authority
of a democratic mandate is required for decisions in these areas.
(para 138)
(8) The OECD regulatory checklist should be utilised
as standard for legislation, regulatory decision-making and in
establishing any new regulator. (para 142)
(9) The recommendation of the Better Regulation
Task Force (BRTF) that regulators should produce Regulatory Impact
Assessments (RIAs) on all new major policies and initiatives has
been accepted by the Government and should be applied throughout
the system. We also endorse the Task Force's recommendations,
among others, aimed at increasing the transparency and accountability
of regulators, including open meetings and agreeing a management
statement with the sponsor Department. (para 146)
(10) The BRTF should review its principles of
good regulation to ensure that the principles of coherence, objectivity
and rationality of approach are incorporated and signalled to
the wider public. (para 148)
(11) There must be a much stronger communication
of the 'whole of government' view of regulation. We recommend
that the Government appoint a lead Department to be responsible
for promoting effective regulation in practice, thereby co-ordinating
the various roles currently played by a number of Departments,
including HM Treasury, DTI, the Cabinet Office and the Office
of the Prime Minister. Logically, the Cabinet Office should assume
this role, possibly by expanding the remit of its RIA unit. Its
responsibilities should mirror those we outline for a parliamentary
committee in paragraphs 199 to 203. (para 152)
(12) There should be consistency in applying
regulatory models and requirements on a like-for-like basis. (para
153)
(13) The move towards self-regulation should
be encouraged and co-regulation should, where appropriate, be
used as a preliminary to it. (para 157)
(14) Regulators should have a statutory duty
to have regard to the principles of good regulation and effective
accountability. These should include self-assessment of their
compliance with the same; the design of effective consultation
procedures to engage interested parties; ensuring that redress
and compensation procedures are clear and accessible; and incorporating
the outturn of plans in their annual reports. They should also
include the publication of the following:
(a) their mission statements;
(b) codes of practice for the conduct of their
regulatory office;
(c) codes of practice for consultation (including
the duty to summarise and accept or rebut consultees' comments,
with reasons);
(d) their forward plans;
(e) the explanations of and reasons for their
decisions; and
(f) all relevant material necessary for their
production before and after RIAs. (para 169)
(15) Regulators should adopt a structured approach
to consultation designed to minimise the burdens on those consulted
and to facilitate their engagement with either the principles
or the detail as appropriate to the interests of those consulted.
(para 173)
Exposure to scrutiny
(16) A dedicated parliamentary committee should
be established to scrutinise the regulatory state. (para 199)
(17) This should preferably be a joint committee
of both Houses and should be given the necessary resources to
fulfil its task effectively. (para 200)
(18) We recommend that select committees consider
expanding their terms of reference to include a requirement routinely
to consider and react to regulators' annual reports, and monitor
the use of resources. These activities would be in addition to
the ad hoc inquiries they undertake from time to time.
(para 202)
(19) In order that parliamentary scrutiny by
select committees can be more consistent and co-ordinated, it
should be focused around the annual report and the published RIAs,
and with specific attention paid to a harmonised whole of government
view of regulation. (para 203)
(20) The NAO should have access consistently
to all regulatory bodies, including the Financial Services Agency
(FSA), with a view to monitoring their cost-effectiveness and
budgetary control. (para 212)
(21) We welcome the expansion of the role of
the NAO and recommend that the annual review of Regulatory Impact
Assessments by the NAO be developed. In order to maintain the
strict independence of the NAO and its scrutiny role, we recommend
that this should not be undertaken as an agency of the Cabinet
Office. These RIAs need to be conducted retrospectively as well
as in advance, to ensure that cost-effectiveness is constantly
under review. (para 218)
Independent review; improving appeals
(22) Appeals should provide an opportunity for
the regulated to have their objections reviewed on the merits
of the case, subject only to the condition that the appeal body
should have the clear ability and power to identify and penalise
appeals designed to frustrate equitable regulation. (para 230)
(23) Simplified systems of fast track appeals
against regulatory decisions and arbitration should be developed
for the Competition Commission and the Competition Appeal Tribunal,
and made available subject to the agreement of each of the parties
concerned. (para 231)
(24) We further recommend that a Regulatory Appeals
Tribunal should be set up to cover regulatory decisions that do
not fall within the jurisdiction of either the Competition Commission
or the Competition Appeal Tribunal. (para 232)
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