The regulator’s dilemma – where expectations meet outcomes

Jul 18
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The use of enforcement tools by regulators can be a difficult and unforgiving process. Recently in Canberra the territory’s gambling regulator brought court proceedings against a licensed party and then decided not to continue in favour of a negotiated outcome. The outcome indicated that the regulated party would pay $60,000 to an anti-gambling foundation, put in place systems to improve performance and train staff.

There was an outcry from the public and politicians about how terrible this decision was. Everybody was calling for the venue to be dragged before the courts in the assumption that a sentence would be given where licences would be removed, directors would be gaoled, and staff would be permanently branded with hot irons.

Had the matter proceeded to court, the most likely outcome (based on what is known about the matter) would have been some form of fine for the company entity, directors would not have faced any charges, no licences would have been cancelled and (hopefully) staff would remain in employment without branding.

Let’s say the regulator did proceed and lost the case, the same people that were calling for heads on sticks would be calling the regulator incompetent or that an immediate review of the organisation is needed.

But what is the regulator to do? On one hand there is an expectation that the regulator will deliver public value and outcomes efficiently and effectively. On the other hand, regulators are perceived to be unforgiving ‘watchdogs’. Mixed in with this is ministerial expectations and managing reputational risk. Navigating through the web of community expectations, political expectations, managing organisational risk and getting outcomes requires regulators to adopt a specific mindset and course of action.

I would propose the first thing regulators need to accept is the concept that they have no allies. Regulators need to see themselves, in a sporting parlance, as the umpire. Nobody truly likes umpires (except other umpires), everybody likes to review the umpire’s decisions (because we all support a team playing in the game), umpires make thousands of decisions yet are roasted over one or two decisions (that generally didn’t go the way of the team complaining) and umpires have had a ‘good game’ when no one remembers them (now there is an inspiring thought for motivating staff).

Secondly, regulators need to be sure that they have the right systems and process in place to manage their work. Too often regulators are undercooked in their processes either in their administrative functions or their regulatory responsibilities. By being in this position regulators are opening themselves to avoidable criticism. Regular review of processes and continuous improvement should always be occurring.

Finally, and in two parts, regulators should continue to focus on the matters they see most frequently, understand the most effective tool to implement behavioural change and then use it quickly and regularly. This will provide a foundation for a story of what the regulator is doing. While doing this, regulators should be scanning their environment to identify issues that might emerge and possibly will disrupt their work.

The life of a regulator can be a complicated, challenging and full of criticism. Yet the contribution effective regulators can make in positively shaping communities can be lasting and rewarding. To achieve that outcome requires commitment to the right mindset, good systems and the ability to tell a credible story through actions.

Murray Smith will be presenting at the Enhancing investigations and Enforcement Outcomes forum on 18th & 19th September in Canberra. Join him and others for thought provoking presentations on the strategies to improve the efficiency and effectiveness of regulatory investigations and enforcement actions.

Submitted by Murray Smith

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