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Regulatory Quality and Treasury - Introductory Briefing [Briefing to the Incoming Minister for Regulatory Reform 2011]

Annex C: Best Practice Regulation Principles and Assessments

Best Practice Regulation Principles and Assessments
Attribute Principle Indicators
Growth-focused Economic objectives are given an appropriate weighting relative to other specified objectives 
  • Identifying and justifying trade-offs between economic and other objectives is an explicit part of decision-making
  • The need for firms to take long term investment decisions is taken into account in regulatory regimes where appropriate
  • Open and competitive domestic and international markets  including minimising barriers to, and maximising net benefit from, cross-border flows, are explicit objectives
Proportional The  burden of rules and their enforcement should be proportionate to the benefits that are expected to result
  • A risk-based, cost-benefit framework is in place for both rule making and enforcement
  • There is an empirical foundation to regulatory judgements
Flexible Regulated entities should have scope to adopt least cost and innovative approaches to meeting legal obligations.
  • The underlying regulatory approach is principles or performance-based, and policies and procedures are in place to ensure that it is administered flexibly
  • Non-regulatory measures, including self-regulation, are used wherever possible
  • Decisions are reassessed at regular intervals and when new information comes to hand
Durable The regulatory system has the capacity to evolve to respond to changing circumstances
  • Feedback systems are in place to assess how the law is working in practice including well-developed performance measurement and clear reporting
  • The regulatory regime is up-to-date with technological and market change, and evolving societal expectations
Regulated entities have certainty as to their legal obligations, and the regulatory regime provides predictability over time.
  • Safe harbours are available and/or regulated entities have access to authoritative advice
  • Decision-making criteria are clear and provide certainty of process
  • The need for firms to take long term investment decisions is taken into account in regulatory regimes where appropriate
  • There is consistency between multiple regulatory regimes that impact on single regulated entities where appropriate 
Transparent and accountable Rules development, implementation and enforcement should be transparent. 
  • Regulators must be able to justify decisions and be subject to public scrutiny
Capable regulators The regulator has the people and systems necessary to operate an efficient and effective regulatory regime
  • Capacity assessments are undertaken at regular intervals and subject to independent input and/or review
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