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Revolutionary regulation reforms

Professor Richard Macrory (UCL Laws) saw his set of recommendations on regulatory reform passed into law just two years after submitting his report. Professor Macrory’s recommendations were accepted in full by the government, and the Regulatory Enforcement and Sanctions Act, which received Royal Assent in July 2008, took forward his conclusions on governance and administrative penalties. It provided new framework powers for regulators and local authorities throughout England and Wales.

Professor Macrory’s report ‘Regulatory Justice: Making Sanctions Effective’ made a series of recommendations, the most important of which being that the range of sanctions available to regulators should be increased. Before, if a regulator wanted to impose a sanction for non-compliance, they could only do it through the criminal courts.

Professor Macrory developed a set of six principles that should underlie a modern regulatory sanctioning system – and which are now known as the ‘Macrory Principles’. Of these, the two most important are that the purpose of a regulatory sanction is not to punish per se but to get the business back into compliance, and that a sanctioning system should ensure that no financial profit is made from non-compliance.

The other major feature of the report was the issue of governance for regulation. Professor Macrory made important recommendations concerning governance. Perhaps the most important is that no income from penalties should ever go direct to the regulators themselves – so they cannot be accused of money-making. The other is that openness is very important to the process: regulators should report annually on their activity so that their behaviour is transparent to the parties being regulated by them, as well as to the wider public. Though originally only based on regulators and local authorities in England and Wales, several overseas authorities have expressed interest in his conclusions.

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