IMF boss renews call for RR

Regular readers of this blog must have noticed that we have up to now desisted from commenting on one of the major industries constantly under scrutiny and proposed for regulatory reform: the financial sector. This is a deliberate omission. Regulatory Reform as tackled in this blog is a horizontal set of institutions, policies and tools that can be applied in most sectors of the economy. It is up to regulators in each sector to make the best use of the principles. But to avoid leaving such a major gap in our coverage, we will henceforth report the most stimulating news in regulatory reform of the financial markets, starting with Monday's declarations by Christine Lagarde, the managing director of the IMF. "Better regulation of the financial sector remains critically important in the years ahead to make the financial sector safer and more stable, and to put the industry back in the service of the real economy," she said . Ms Lagarde cautioned against the inconsistency of implementation.

Indian RR: poor results

Though an impressively dynamic economy, India still does not offer a competitive business environment. According to the 2012 Doing Business ranking, though present in the 30 economies that improved the most over time, India still ranks low overall , with its rank improving marginally from 139 to 132 between the 2011 and 2012 reports. On the reform undertaken in India, the 2012 report said, “When India dismantled a strict licensing regime controlling business entry and production the benefits were greater in states that had more flexible labour regulations”.
These results point at insufficient results fromRegulatory Reform which, though on the books since the late 1990's seems to be slow in delivering, as reported on this blog.
Today, in awell documented article is published on India Express, a former chairman of Public Interest Foundation, gives figures about how the Indian legal corpus has been streamlined, but not sufficiently. Texts remain from the colonial days. He also calls for a framework to channel regulatory activities ("regulate the regulators.")

OSCE-supported 'regulatory guillotine' (Armenia)

An Armenian radio bulletin announces the launch of a legal simplification programme to be conducted over the next 2 years, using the "regulatory guillotine" approach. The project will involve reviewing and streamlining the national regulatory frameworks affecting business activity and the daily lives of citizens. Throughout the duration of the project, a Joint Dialogue Forum will be facilitate the exchange of information and further discussions between stakeholders. Other donors are contributing: the Austrian Development Agency , USAID, the World Bank and UNDP. For more, see previous posts about Armenia.

A circular to boost "the quality of the law" (France)

The French Prime Minister issued in July a new circular (non legally binding instruction to ministers) upgrading procedures for better "legal security and predictability, and simplification of ill-adapted or obsolete rules" and also to improve the attractiveness of the French legal model. The text primarily deals with organisational issues: annex I offers ways to enhance the regulatory management process (with better planning and monitoring of the legal production); annex II suggests improved documentation of new regulations, including early planning of subordinate legislation and RIAs and the drafting of short presentation note stating the public(s) concerned and new legal content (akin to the EU "citizen's summary"). In spite of the mention of "attractiveness" in the first paragraph, the circular consolidates the traditional legal approach to law drafting.

New definition of smart regulation (US FDA)

Under the title " FDA official urges smart regulation" a short article in the Philadelphia Inquirer online edition uses smart regulation to sum up a necessary new paradigm for Health law. "Caught between wary patients who want safe artificial hips and demanding medical-device manufacturers who want their potentially lucrative gizmos approved yesterday, the top device official at the U.S. Food and Drug Administration told skeptical industry executives gathered Monday at the Convention Center that he was trying to institute a paradigm shift to help all parties.
'It's not safety or innovation, Dr. Jeffrey Shuren said. It's safety and innovation.
'We needed to move away from this construct that safety and effectiveness and facilitating innovation are incompatible," Shuren, director of the FDA's Center for Devices and Radiological Health, said at the Biotech 2011 conference, "They are both sides of our mission."

Extra red tape on rule making? The new RAA (US)

An interesting discussion in the US, on the same theme as the previous post (accountability of regulators) is provided by a recent post on "the Hill" (US Congress Blog) under the polemic title: "Regulatory reform good for multinationals, yet bad for you."
The Regulatory Accountability Act of 2011 (RAA), a bipartisan bill introduced in the House and Senate, updates rules on how Federal agencies analyze costs and benefits, with detailed procedures for agencies promulgating regulations that are projected to have a minimum effect of at least $100 million on the United States economy.
The vice-chair of the American Sustainable Business Council questions the proposed legislation. It "will likely dramatically drive up the cost of almost every rule-making process and budget of a federal agency. Second, federally elected officials will be stripped of their ability to responsibly lead our country. And third, the RAA is a highway to never-ending lawsuits by special interests against the federal government.
The RAA is designed to micromanage every federal agency in its efforts to create rules necessary to carry out legislation passed by Congress.
By doing so, it turns over 60 years of effective regulation promulgation under the Administration Procedures Act into a protracted process that will stretch the time needed for rule-making into decades. Federal agency budgets will need to be expanded by hundreds of billions of dollars to comply with the RAA and perform their usual functions of protecting the public and small businesses from unsafe products and practices."
A similarly critical view is taken by OMB Watch, a nonprofit research and advocacy organization.
For a more balanced view, see RegBlog post reporting the most recent hearing in the House (Judiciary Committee).

BR by better regulators (UK)

Regulating the regulators to enhance the quality of regulation. OECD papers regularly call for greater accountability by regulators toward government for delivering on stated policies, with results to be obtained by a change of culture including greater evidence base for regulation, and effective consultation, with appropriate oversight arrangements (see for example new Recommendation on Regulatory Policy and Governance section 7).
Yesterday the UK fleshed out these principles in a new formulation for the British context. The Business and Enterprise Minister made a number of proposals for improving the regulatory landscape, based on "a more mature relationship between business and regulators" (see BIS press release) including :

• More use of co-regulation, where business shares a degree of regulatory responsibility, for example through industry bodies setting professional and working standards
• Greater 'earned recognition' – where regulators recognise business activities that support compliance and reduce intervention, creating a stronger incentive for private sector led compliance
• A role for Local Enterprise Partnerships (LEPs) to improve the transparency and accountability of local regulation – bringing business and regulators together to look for ways to reduce unnecessary burdens
• Clearer, more straightforward guidance – so that businesses, particularly SMEs, have greater access to clear guidance on what they need to do to comply.