Principles for the Governance of Regulators Public Consultation draft



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Accountability and transparency


. The regulator exists to achieve objectives deemed by government and the legislature to be in the public interest and operates using the powers conferred by the legislature. A regulator is therefore accountable to the legislature, whether directly or through its Minister. It should regularly report publicly on the fulfilment of its objectives and demonstrate that it is efficiently and effectively discharging its responsibilities with integrity and objectivity. Accountability and transparency the other side of the coin of independence and a balance is required between the two. Comprehensive accountability and transparency measures actively support good behaviour and performance by the regulator, as they allow the regulator’s performance to be assessed by the legislature or responsible other authority.

12.Principles for accountability and transparency

13.Accountability and performance

  1. The expectations for each regulator should be clearly outlined by the appropriate oversight body. These expectations should be published within the relevant agency’s corporate plan.

  1. Regulators are accountable to the legislature directly or through their Ministers and should report publicly and regularly on the fulfillment of their objectives and the discharge of their functions, including through a comprehensive set of meaningful performance indicators.
14.Transparency

  1. Key operational policies and other guidance material, covering matters such as compliance, enforcement and decision review, should be publicly available.
15.Review of decisions

  1. Regulated entities should have the right of appeal of decisions that have a significant impact on them, preferably through a judicial process. Regulators should establish and publish processes for arm’s length internal review of significant delegated decisions (such as those made by inspectors).

  2. The opportunity for independent review of significant regulatory decisions should be available in the absence of strong public policy reasons to the contrary.

Engagement


. One objective of good regulator governance is to enhance public and stakeholder confidence in the regulator, its decisions and its actions. Effective engagement with regulated parties and other stakeholders helps achieve this.

16.Principles for engagement

17.Fit for purpose

  1. Regulators should undertake regular and purposeful engagement with regulated entities and other stakeholders focused on improving the operation and outcomes of the regulatory scheme.

  2. Procedures and mechanisms for engagement should be institutionalised as consistent transparent practices.
18.Avoiding capture and conflicts of interest

  1. Engagement processes used should protect against potential conflicts of interests of participants and guard against the risk that the regulator may be seen to be captured by special interests.



Funding


. Clarity about regulators’ sources and levels of funding is necessary to protect their independence and objectivity. Transparency about the basis of funding can also enhance confidence that the regulator is efficient, as well as effective.

19.Principles for funding

20.Supports outcomes efficiently

  1. Funding levels should be adequate to enable the regulator, operating efficiently, to effectively fulfil the objectives set by government, including obligations imposed by other legislation.

  2. Funding processes should be transparent, efficient and as simple as possible.
21.Regulatory cost recovery

  1. Regulators should not set the level of their cost recovery fees, or the scope of activities that incur fees, without arm’s-length oversight. These fees and the scope of activities subject to fees should be in accordance with the policy objectives and fees guidance set by government or, where these are not in place, the OECD’s Best Practice Guidelines for User Charging for Government Services.

  2. Where cost recovery is pursued , the regulator should avoid imposing unnecessary or inefficient administrative burdens or compliance costs on regulated entities.
22.Litigation and enforcement costs

  1. Because of the significant and unpredictable costs involved, regulators should follow a defined process to obtain funding for major unanticipated court actions in the public interest that is consistent with the degree of independence of the regulator.
23.Funding of external entities by a regulator

  1. A regulator should only fund other entities to deliver activities where they are directly related to the regulator’s objectives, such as information and education about how to comply with regulation, or research to inform the regulator’s priorities. Any funding of representative or policy advocacy organisations should be the responsibility of the relevant Ministry, not the regulator.





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