Self Regulation

Written by Colin Breed on Mon 30th Nov 2009

For very many years I have supported the concept of self regulation. This is the notion that businesses, individuals, professions and public bodies or associations should be subject at least to the minimum necessary formal regulation or legislation. This could be achieved through self discipline, professional bodies or trade associations, the relevant codes of conduct, rules of operation or just the reputation in market conditions, and that these would be sufficient to ensure proper standards and complaints procedures were enforced, so that costs were minimised but the objectives achieved.

As a former banker and now an Associate of the Institute of Bankers I was subject to their professional standards not only through examination but in respect to personal integrity, so that I did not bring the Institute in any way into disrepute. Other professional bodies, like law, accountancy and medicine, operated in a similar fashion and trade associations have operated for services like plumbing, building and gas installation. However, during the last decade or so and perhaps because of being an MP, I have begun to change my mind on the whole concept of self regulation.

Having taken up cases with numerous bodies on behalf of constituents, seen how many of these bodies operate, and in particular dealing with legitimate complaints I can well understand the growing frustration and the gradual erosion of public confidence, which must be rebuilt if they are to remain credible and do the job properly.

The growth of formal regulation in the privatised industries of energy, rail, water and communications somehow has not necessarily provided a satisfactory alternative. The problems of the Financial Services Authority in regulating the Banks is hardly comforting and now the decision of Ofwat with respect to water charging does not at face value protect consumers in what is a vital public service operating in a complete commercial monopoly. There have been many calls for Ofgem to investigate energy prices where the privatised companies have made huge profits while increasing their prices well above the cost of living index. Even the Ombudsman service is not totally satisfactory when investigating complaints against central or local governments.

It seems that too often the public has to resort to the media in order to shame or force through complaints or injustices which is not the best way of getting an appropriate resolution. Regulation by media only serves to sensationalise, is often biased and is sometimes reported without the careful consideration necessary.

I want regulation to be appropriate, practical, enforceable and proportionate. I want it enforced by an acceptable and credible regulator which enjoys public confidence and to apply such rules and regulation with consistency. It can be achieved, but if self-regulation is fading and formal regulations are not up to it we need urgently to find the means to restore public confidence in the system, whatever that may be.