ESA Welcomes Issue of Better Regulation Code 

The Department for Business, Enterprise and Regulatory Reform (BERR) has recently issued the Regulators’ Compliance Code. Heralded as “a central part of the Government’s better regulation Agenda”, the aim of the code is to “embed a risk-based, proportionate and targeted approach to regulatory inspection and enforcement among the regulators it applies to.” The Code will come into force in April.

ESA has consistently argued that, as regulation drives growth and development in our sector, regulators must work effectively to deliver proportionate and risk-based regulation, and Government expects the new Code to deliver significant benefits to low risk and compliant businesses through better-focused inspection activity, increased use of advice for businesses, and lower compliance costs.

Government wants regulators to adopt a positive and proactive approach towards ensuring compliance by helping industry to understand and meet regulatory requirements more easily and by ensuring that regulators respond proportionately to regulatory breaches and, following the better regulation principles of the Hampton Review, the Code emphasises that Regulators should:

1. Consider the impact of their regulatory interventions on economic progress, including the costs, effectiveness and perceptions of fairness of regulation

2. Base all their work on risk assessment, including data collection and other information requirements, inspection programmes, advice and support programmes and enforcement and sanctions. Government recommends that methodologies for risk assessment are designed in consultation with regulated entities

3. Improve compliance through greater focus on support and advice, including the prompt communication of legal requirements along with general information, and clear and concise advice and guidance, the content and style of which should be developed in association with regulated entities. The Code also recognises that regulated entities must be able to seek and access advice from the regulator without directly triggering an enforcement action

4. Have effective risk-based inspection programmes, with only a small element of random inspections, in order to test risk methodologies or the effectiveness of interventions. Greatest inspection effort should be focused where risk assessment shows that a breach would pose a serious risk and there is high likelihood of non-compliance by regulated entities

5. Balance the need for information with the burdens for regulated entities by undertaking an analysis of the costs and benefits of data requests.

6. Target those who deliberately or persistently breach the law and reward those that consistently achieve good levels of compliance through positive incentives, such as lighter inspections and reporting requirements, with sanctions and penalties being consistent with the Macrory Review

7. Establish effective accountability and transparency to make activities open to scrutiny, thereby increasing the legitimacy of regulatory activities.

ENDS

Note: For further background