PREVENTING UNDUE INFLUENCE AND MAINTAINING TRUST – 55

2. PREVENTING UNDUE INFLUENCE AND MAINTAINING TRUST –
55
THE GOVERNANCE OF REGULATORS © OECD 2014
Maintaining trust indecision making
Independence exists within the legislative framework provided for the regulator by the legislature and as noted earlier is always a matter of degree. Structural separation is, however, one important way of reducing risks to regulatory integrity. The most independent regulators are created through the establishment of separate statutory bodies or positions, with a formal and typically public process for appointment of members of the governing body and with specific enabling legislation governing the regulator’s objectives, functions, powers and accountability. This limits the extent of ministry and ministerial involvement in day-to-day decision making by the regulator. Independence indecision making can also be fostered by a number of other means including
• operational clarity (see introduction
• clear articulation of decision-making power in legislation
• clarity about requirements for reporting to the minister
• definition of the minister’s power to direct the regulator and transparent processes around the issuing of directions (see Chapter 4);
• an adequate resource base (see Chapter 6);
• staffing flexibility – to attract and retain competent specialised staff for certain regulatory functions
• transparent processes for appointment to governing bodies and chief executive positions
• explicit provisions covering performance criteria and review
• explicit conditions and transparent processes for appointment and termination of appointments, including appeals processes and
• limitations or restrictions on members of the regulator’s governing body accepting employment in the regulated industry after leaving the regulator (“post-separation” activities. Governance arrangements should ensure that where regulators have a substantial degree of independence they are adequately accountable for their activities (see Chapter 4).

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– 2. PREVENTING UNDUE INFLUENCE AND MAINTAINING TRUST
THE GOVERNANCE OF REGULATORS © OECD 2014

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