The Malta Independent 12 November 2024, Tuesday
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The proper role and functions of regulatory authorities

Mark Said Sunday, 6 October 2024, 07:57 Last update: about 2 months ago

Surprisingly, under existent legislation, we have no fewer than twenty-seven different regulatory authorities in Malta, ranging from such important and often controversial bodies as the Planning Authority to the Broadcasting Authority. Of course, this is not to belittle the importance of other entities, such as the little-known or publicised Control of Major Accident Hazards Regulation Competent Authority or the Authority for Integrity in Maltese Sport.

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In general, there are few businesses, commercial activities, or other types of activities that are not subjected to regulatory authorities or agencies. They are all governmental bodies that are created by a legislature to implement and enforce specific laws and may afford quasi-legislative functions, executive functions, and judicial functions, depending on the nature of the activity involved. An aspect common to all of them is that they are tasked with the responsibility of guaranteeing the protection, maintenance and improvement of the services offered.

As one of the main actors in regulatory policy, regulators have an important and increasingly complex role in the delivery of regulatory regimes and regulations. The governance arrangements for regulators are a key factor in a regulator's ability to operate effectively to achieve the social, environmental, and economic outcomes it is responsible for. Most important of all, it should be recognised that an effective regulatory policy must include a consistent policy covering the roles and functions of regulatory agencies in order to provide greater confidence that regulatory decisions are made on an objective, impartial, and consistent basis, without conflict of interest, bias or improper influence.

During the last few decades, Malta has apparently strengthened its use of a range of regulatory management tools. There is now a more careful examination of the need for regulation and the available design options. The last Nationalist administration and recent governments have outlined their policy on improving the design of regulation through regulatory impact analysis and stakeholder engagement mechanisms, often with the support of central scrutiny of a proposed new regulation.

But good regulatory outcomes depend on more than well-designed rules and regulations, and this is what our regulatory authorities might perhaps be lacking and not grasping. How many times have they shown genuine good intentions in searching for opportunities to remove unnecessary burdens on the business community and citizens?

Efficient and effective authorities, with good regulatory management and governance practices, are needed to administer and enforce regulations. If ever any comprehensive regulatory reviews of individual policy areas are carried out by the government, one should find that there is scope to enhance governance as part of broader initiatives to improve regulatory outcomes. Appropriate governance arrangements for regulatory authorities support improvements in regulatory practice over time and strengthen the legitimacy of regulation.

Appropriate governance arrangements are numerous. Regulators should, by law, be free to make decisions within the scope of their authority without having to obtain prior approval from other officials or agencies of government. They need to be adequately insulated from short-term political pressure. They need to be held accountable for their actions. The entire regulatory process must be fair, impartial, and open to extensive and meaningful opportunities for public participation. The regulatory system should provide reasonable certainty as to the principles and rules that will be followed within the overall regulatory framework, and the role of the regulatory authority should be carefully defined in law.

Completeness and clarity of rules are essential, and the regulatory system, through laws and agency rules, should provide all stakeholders with clear and complete, timely advance notice of the principles, guidelines, expectations, responsibilities, consequences of misbehaviour, and objectives that will be pursued in carrying out regulatory activities. The legislation establishing a regulatory scheme or framework should be written so that the purpose of the regulator and the objectives of the regulatory scheme are clear to the regulator's staff, regulated entities and citizens.

Regulatory authorities should not be assigned conflicting or competing functions or goals. The assignment of potentially conflicting functions to any regulator should only occur if there is a clear public benefit to combining these functions and the risks of conflict can be managed effectively. Where a regulatory authority has a range of functions, it is important that these are complementary and not potentially in conflict. This means that the performance of one function should not limit or appear to compromise the regulator's ability to fulfil its other functions (including its core regulatory function).

Regulatory intervention in the various sectors should be proportionate to the challenges the regulators are addressing, and authorities should, under the law, possess all powers required to perform their mission. They must be able to consistently perform professionally, competently, and thoroughly. Above all, strict rules covering the behaviour of decision-makers should be in place so as to preclude improprieties or any conduct appearing to be improper. In the world of regulatory authorities, the implementation of typical quality assurance requirements should gradually become an established practice. It must be understood that, in order to properly discharge their responsibilities and efficiently perform their regulatory activities, planned and systematic measures, such as those established under a quality assurance programme (also called quality management), have to be in place.

Regulatory authorities can fail to deliver if their activities are unduly influenced, whether by the regulated activity, the government, politicians, or outside interest groups. Granting powers to independent regulatory authorities may face resistance, but ensuring that a regulator has adequate powers that are clearly communicated and understood by relevant stakeholders proves critically important to prevent outside interference. Having a supportive enabling environment that includes a strong rule of law also helps the regulator exercise its powers correctly.

Every new rule, mandate, and regulatory edict should no longer be presumed to be another obstacle that small business owners, entrepreneurs, job creators, and John citizens have to swallow. Finally, regulatory authorities should be in the best position to regulate when their personnel are intimately knowledgeable about the activities they are regulating.


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