Regulatory and enforcement sanctions Act
THE REGULATORY ENFORCEMENT AND SANCTIONS ACT 2008 – SUMMARY OF PROVISIONS1. The Regulatory Enforcement and Sanctions Act 2008 is designed to provide more consistent enforcement of regulations across local authorities, better co-ordination between local authorities and central government and more effective enforcement of regulations. It also obliges regulators to conform to certain headline principles. The Act, passed in response to the Hampton Report commissioned in the 2004 budget, has four parts :
(i) Part 1 re-establishes a Local Better Regulation Office (LBRO), already established in May 2007 as a government owned company, as a statutory corporation with statutory powers.
(ii) Part 2 establishes a Primary Authority scheme, whereby businesses which operate in more than one local authority area can choose to nominate one authority as the primary one for regulatory purposes.
(iii) Part 3 introduces four new civil penalties that regulatory authorities will be able to impose on businesses.
(iv) Part 4 imposes a duty on regulators to keep
their regulatory activity under review and remove
unnecessary burdens and to keep their regulatory
activities to a necessary minimum.
Local Better Regulation
2. The Local Better Regulation Office (LBRO) has
now statutory powers to promote better regulation
and consistency within local authority regulatory
services. It can issue guidance and ensure
compliance with that guidance by the local
authorities and encourage best practice and
consistency amongst regulators. Guidance will be
authoritative and compliance is mandatory,
requiring local authorities to have regard to any
enforcement priorities published by the LBRO.
Examples of national enforcement priorities
include alcohol and entertainment licensing and
its enforcement, food safety and fair
trading.
Primary authority
3. A “primary authority” is a local authority
registered by the LBRO as having a responsibility
for a particular business or organisation. This
may relate to single functions such as trading
standards, licensing and health and safety. The
primary authority is responsible for giving
advice to the relevant organisations that are
subject to its regulatory enforcement and other
local authorities on how they exercise
enforcement procedures. The aim is to encourage
consistency within regulatory enforcement amongst
large business concerns who are regulated by
numerous local authorities. The HSE will liaise
with the LBRO to offer guidance as well. The
objective is that businesses and local
authorities will work closely together with other
local authorities to ensure compliance in a
spirit of consistency, co-ordination and
compliance by the creation of inspection plans
and a duty to consult primary authorities before
enforcement action.
Regulatory sanctions
4. Civil sanctions will be available to
regulators as a more effective and flexible
alternative to formal prosecutions under the Act,
as follows: Fixed Money Penalties (FMP), a fixed
penalty enforceable through the civil courts as
an outstanding debt if the debt is not satisfied
within a specific period of time.
Discretionary requirements
5. Having given notice to the potential
defendant, regulators are entitled to impose one
or more of the following:
(a) Variable Monetary Penalties (VMP) to be
determined by the regulator in order to remove
any financial gain from the offender. The
Compliance Notice, a direction to take specified
steps within a stated period of time to ensure
that the offence does not reoccur (e.g. making
unsafe food healthy, unsafe equipment). The
Restoration Notice, a direction to take specified
steps within a stated period to ensure the
position is restored to its original state had no
offence been committed (e.g. reimbursing a
customer’s money).
Stop Notice
6. This is a direction to cease carrying on
activity in order to reduce or eliminate the risk
of harm to human health, the environment,
consumers financial interests or the commissioner
of an offence.
Enforcement undertakings
7. These undertaking give a business having been
suspected of committing an offence the ability to
give relevant undertakings to ensure that
corrective action is undertaken.
8. The powers flow to the relevant authority by
the granting of those powers by a minister and
the minister may also suspend or review such
powers.
Appeals from decisions and sanctions
9. All of the new sanctions above are appealable
to a first tier tribunal or other statutory
tribunal established under the Tribunals,
Courts and Enforcement Act 2007 by a tribunal
judge sitting alone or with one or two members
who have relevant experience in the regulatory
field. The tribunal may withdraw, confirm or
remit the decision back to the regulators to take
such steps as are necessary. Businesses are also
entitled to recover reasonable costs from the
regulator for imposing discretionary requirements
for stop notices. Either party may claim the
costs incidental to the tribunal hearing.
10. Guidance will be an important feature of the relevant scheme and the policy underpinning it will also be subject to regular review.
11. Regulators will now be forced to keep their
functions under review on an annual basis and
will not impose unnecessary burdens and must
remove such burdens if it is practical and
proportionate to do so.
The aspiration of the Act
12. The aspiration of the Act is by the use of
alternative penalties to encourage compliance
rather than simply constructing another
prosecutorial regime. Regulators by the use of
administrative penalties and other sanctions will
gradually decriminalise some aspects of
regulatory misconduct which are currently the
subject of criminal sanction, normally triable in
the magistrates’ courts. The obligation of
regulators to publish guidance and report on
their activities on an annual basis will provide
it is hoped more transparency and a significant
reduction in criminal proceedings and
prosecutions. It is hoped this approach will
cause a significant cost reduction which
currently burdens both local authorities and
those who are regulated by them.
Conclusion
13. The extent to which it is appropriate for
regulatory authorities rather than the courts to
make determinations as to whether a person has
committed what has hitherto been a criminal
offence and to impose potentially unlimited
financial penalties is debatable. It will be some
time before one can reasonably draw any firm
conclusions as to whether the appropriate
standards of procedural fairness are being
maintained in accordance with those already in
existence for criminal prosecutions.
14. Because as presently envisaged the scheme
only extends to England and Wales, Scotland falls
outwith this regime and therefore there will be
inconsistent arrangements within the UK.
15. There are also some concerns over whether
these arrangements merely add to the burden of
large statutory regulators who already have very
well developed systems (e.g. Food Standards
Agency, HSE), simply adding another layer of
statutory control merely complicates matters
rather than meeting the government’s aspirations
to reduce the costs of regulation and to
rationalise the inspection and enforcement
processes.
16. Whilst the magistrates’ courts will be less
burdened now by technical criminal prosecutions
within the regulatory ambit, there are likely to
be many uncertainties along the way in the
implementation of this Act if the burdens fall on
individual local authorities to formulate their
own arrangements and operated in a consistent and
coherent fashion.
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