Pros And Cons Of Responsive Regulation

The idea behind responsive regulation is that many components should be taken into account before different approaches are required, for example, the context and conducts of those that have to be regulated as well as the culture of that trader. The responsive regulation model also acknowledges the need for all enforcement strategies to be practical and appropriate to the context. The method was described in The Medical Journal of Australia as “soft words before hard words, and carrots before sticks” meaning that there should be softer sanctions first off, with the threat of larger sanctions if they continue to act in the way they have been.

The foundations behind the responsive regulation are illustrated in the widely accepted regulatory pyramid from Responsive Regulation: Transcending the Deregulation Debate . It clearly demonstrates lighter sanctions at the base, escalating to severe sanctions at the top designed to be sufficiently undesirable that it would prevent certain behaviours. It was Ayers and Braithwaite’s belief that when using this model regulator and regulations should focus the majority of their time on the bottom of the pyramid and only intensify measures when absolutely necessary and de-escalate procedures whenever possible.

In the UK, legislation in place combating prohibited commercial practices between traders and traders are the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). The CPRs introduced broad prohibitions on commercial practices that were considered unfair to consumers. The prohibitions cover misleading but also aggressive commercial practices. The overseers of these regulations are the Office of Fair Trading (OFT) and trading standards.

One of the main issues surrounding a self-r...

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The CPRs and self-regulation seek to resolve problems with quality by helping to offer better quality signals to customers, in addition to this they provide businesses with incentives not to lie about the quality they are actually producing, and to a certain extent, the CPRs make it less important that consumers observe the quality of goods as the businesses themselves are monitoring it for them.

The responsive regulation policy may be better than the CPRs at regulating the industries as they are able to tailor the rules and guidelines to the industry-specific problems, in addition to this, they can allow businesses to share costs of redress and reputation building. They are also able to overcome free rider effects much more easily that the CPRs could. However, for the self-regulation schemes to be successful they need to meet the overarching requirements.