UK: Macrory Regulatory Penalties Review Interim Report Published

An Independent review of penalties for failure to comply with regulatory obligations today published its interim report for consultation. The review, commissioned by the Government as part of its radical programme of regulatory reform, proposes to introduce a more flexible, proportionate and transparent tool-kit designed to ensure better regulatory compliance.

Led by Richard Macrory, Professor of Environmental Law at University College London, the review has found that the current system is heavily reliant on criminal prosecution. The interim report proposes that the use of administrative fines and other non-criminal penalties, could resolve some cases more quickly and effectively.

Professor Macrory said:

‘Rogue businesses who intentionally flout the law for economic gain should be treated as the criminals they are. They pollute the environment, undermine confidence in industry and risk peoples’ lives. But we need a far more flexible system of regulatory sanctions in this country – one that will provide better incentives for legitimate businesses to comply with regulations, and one that gives greater acknowledgement to the interests of victims. My vision for a system of regulatory sanctions will allow regulators to respond far more proportionately to the circumstances and facts of a particular breach’.

While giving regulators a wider range of sanctioning options to enforce regulatory compliance, the proposals also protect business from heavy handed implementation and enforcement. It is proposed that only regulators which comply with the Hampton principles of risk based enforcement would have access to new penalties powers, and before using the new sanctioning tools regulators would need to publish an enforcement policy. Also, appeals against administrative penalties could be made to an Independent Tribunal.

The Government will respond to the final report due in autumn 2006.

Background

1. Copies of the report Regulatory Justice: Sanctioning in a post-Hampton World are available at: www.cabinetoffice.gov.uk/regulation/penalties
2. The closing date for the consultation period is August 18, 2006. The final report and recommendations will be published in autumn 2006.
3. The review was commissioned on the recommendation of the Hampton review on regulatory inspections and enforcement published in the Budget 2005. The Hampton principles of risk based enforcement are set out in Philip Hampton’s report Reducing administrative burdens: effective inspection and enforcement www.hm-treasury.gov.uk/hampton