The Growing Importance of Inspection & Enforcement in
Regulatory Reform
IFC Investment Climate Advisory Services Project in the
Kyrgyz Republic
Donald Macrae
Vilnius, June 18, 2013
Regulatory Delivery
• The purpose of regulation is to deliver benefits to society, the
environment or the economy through changing what people and
businesses do. Usually, these benefits are about reducing risks
to the public.
• “Regulatory reform” has mainly focused on the burdens this
places on businesses and has operated at the rule-making level,
trying to reduce the amount of regulations.
• What has received less attention is the next stage – how these
regulations are implemented in practice. This is the area of
“regulatory delivery”. But there has been a lot of activity . . . .
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It started in Mexico in 1994
Investment Climate
International organisations picked up the
importance of improving the “investment
climate” or “business environment” and
have been developing projects for nearly 20
years.
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WBG support to inspections reforms
Development in OECD Countries
• These organisations had been focusing on developing and
transition economies because that was where they worked.
But OECD countries – led by the Netherlands and the UK –
started their own reforms, unaware of what was happening in
the rest of the world.
In 2005, the UK Hampton Review
gave a huge boost to reform in
this area, with risk at the heart
of the analysis. The “Hampton
Principles” are still seen as
fundamental.
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Dutch Inspection Reform
The Hampton Review also influenced the Dutch who had been
working on Inspection Reform since 2001.
In 2006 they set up the Inspection Council and a five year
reform programme (renewed last year) with the motto:
“More effect, less burden!”
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LBRO / BRDO
In 2007, the UK established the first
government agency in the world focusing
on Regulatory Delivery – the Local Better
Regulation Office.
It worked successfully with businesses, regulators and local
government to develop a better regulatory environment.
In 2012, it was taken inside the Business Ministry as a Directorate,
alongside the Regulatory Reform Directorate, as BRDO.
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OECD
OECD have been the custodians of
mainstream regulatory reform but
mainly at the rule-making level.
In 2012, they started to explore inspections and enforcement,
with a survey of what was being done in OECD countries.
They have now launched a consultation on draft “Best Practice
Principles for Improving Regulatory Enforcement and
Inspections” – with comments required by 31 August.
http://www.oecd.org/gov/regulatory-policy/enforcementinspections.htm
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The London Conference
This all came together in November 2012 in London in a
conference hosted by BRDO:
http://www.bis.gov.uk/brdo/about 180 delegates
us/what-we-do/irc
 36 countries
 3 days of sharing experiences
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Regulatory Delivery and Growth
Better regulatory delivery can assist growth in three ways:
• By reducing the negative impact (reducing the frequency of
inspections, reducing corrupt payments, reducing unjustified
sanctions);
• By creating a “level playing field” for businesses, where they
have confidence in a transparent and fair enforcement system
where their competitors get the same treatment;
• Occasionally, better compliance also leads to business
efficiency and inspectors can provide advice that strengthens
the business.
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“роста с безопасностью”
We can lose sight of the purpose of
regulation and see it just as a
discipline on business.
If the regulatory system doesn’t
deliver the public benefits, it is all
pointless.
So regulatory delivery also has to
focus on effectiveness.
“Prosperity and Protection” (LBRO)
“роста с безопасностью” (Kyrgyz
Technical Safety Inspectorate)
Get the balance right . . . . . . . . . .
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Institutional Change
• Inspection reform has also involved significant institutional
change.
• The OECD survey found that many countries didn’t even know
how many inspection bodies they had.
• Across the world, governments are beginning to optimise the
range of inspection bodies, merging inspections with related
themes and ending legacy inspections that have no value.
• But that also takes us into Public Service Reform, corporate
management, HR management and governance.
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Governance and Performance
There are draft Laws in Armenia and Mongolia proposing that all
inspection bodies:
• Establish stakeholder committees as a governance system to
hold them to account for delivering results;
• Establish performance indicators and targets that are then
monitored by the committees.
In the Armenian version, some performance indicators are
mandatory, related to increasing compliance rather than
sanctions, and a business perception survey to measure progress
in trust in the organisation.
(They got the last one from the Kyrgyz Technical Safety
Inspectorate.)
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International Competency Model
The UK has a set of competences for inspectors that is now
beginning to be taken up as a possible international standard for
inspectors.
It is based on generic core skills
that all inspectors need, plus
added sectoral specialisms.
IFC, BRDO and USAID are combining to design training for this
generic model, initially in Armenia but with the intention of
providing a model inspector training programme.
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Dėkojame, kad klausytis.
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