What is Quality Regulation?

Quality regulation (or better regulation) is a state regulation approach when a state aims to provide the most complete regulatory impact analysis in order to find the most successful solution.

European Commission defines such objectives of better regulation:

  • decision-making is open and transparent
  • citizens and stakeholders can contribute to policy development and law‑making process
  • actions are based on evidence and understanding of the impacts
  • regulatory burdens on businesses, citizens and public administrations are kept to a minimum.

Public consultations are one of the main tools used to increase transparency and regulatory efficiency. There are five ways of organizing this process: informal consultations, circulation of regulatory proposals for public comment, public notice-and-comment, public hearings and advisory bodies.

The aforementioned tools are similar in nature, but differ in degree of structuring and process regulation. Often they are applied collectively. The main purpose of public consultation is to obtain feedback from stakeholders that are the subject of regulation in order to develop a balanced and effective regulatory mechanism.

Regulatory Impact Analysis

Regulatory Impact Analysis (RIA) is a document that is developed before new regulations are introduced by the state. Its goal is to provide a detailed and systematic assessment of the potential impacts of the new regulations and to analyze whether new norms will achieve its goals. Introduction of new regulations usually results in numerous consequences, which are hard to predict without detailed analysis and consultation with stakeholders. RIA compares the various ways to achieve regulatory goals with the use of cost-benefit analysis. In one form or another, RIAs are used by almost all member states of the Organization for Economic Cooperation and Development (OECD).

Alternatives to Regulation

In order to achieve the purpose of regulation, the state can use money of taxpayers. But sometimes the costs may exceed the benefits, regulatory mechanisms may be poorly developed or lead to negative consequences such as reduced competition and excessive administrative burden on business.

Sometimes, regulation is not the most effective option. For instance, when there is a conflict between goals of a regulator and goals of an industry, it makes sense to apply traditional regulatory mechanisms. When goals of the regulator and business coincide, one can use alternatives.

The most commonly used alternatives to regulation are self-regulation and co-regulation.

Self-regulation is one of the models of market regulation, which is used to reduce the administrative costs of a state and administrative burden on businesses. Within such a model, regulation is carried out by market participants themselves by uniting and establishing their own standards of activity and controlling compliance among all members of the organization. As for those markets where state regulation of market access exists, co-regulation is possible. In this case, state functions, which include admission to the market and denial of admission, can be delegated to self-regulatory organizations.

In addition, existing regulatory norms can be improved without introduction of new regulations. In order to investigate this, researches, aimed at identifying the reasons of the low effectiveness of the rules, are carried out. Also, changes in enforcement approach may improve the efficiency of the existing regulations.

As for the introduction of new regulations, for example, there is ‘One-in, Two-out’ rule in the UK. It stipulates that if the government intends to introduce a new norm, complying with which will cost one pound for businesses, the government is obliged to cancel or change regulations, which currently cost two pounds.

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