Penalties Review - Rogue Businesses Should Redress The Harm They Cause

28th November 2006

A review of the penalties for regulatory non-compliance lead by Professor Richard Macrory published its final report today. The report 'Regulatory Justice: Making Sanctions Effective' found that reliance on criminal prosecution failed to give regulators adequate means to effectively deal with many cases in a proportionate and risk based way.

It also found that the use of criminal prosecutions can be a disproportionate response in many instances of regulatory non compliance and that penalties handed down by the courts often failed to act as a sufficient deterrent or reflect the economic benefit gained.

Professor Richard Macrory said:

'A flexible and transparent set of regulatory sanctions will reduce the burden on legitimate business by dealing effectively with the rogues and reducing the need for inspection. Criminal prosecution has an important role to play but regulators need the flexibility to deal with individual cases appropriately. In some cases rogues find it cheaper to ignore regulations and take the penalty than comply, these proposals will end this situation.'

The review proposes a broad 'toolkit' of administrative penalties for regulators to promote and enforce regulatory compliance. It recommends that the Government pilot schemes involving restorative justice whereby those most effected by a regulatory wrongdoing can come together to address the harm and prevent a recurrence.

The report also recommends the extension of flexible administrative monetary sanctions and the strengthening of statutory notices to work alongside the criminal law in combating non-compliance.

Regulators will only get access to the new toolkit when they have demonstrated to the Panel on Regulatory Accountability that they are compliant with the Hampton and Macrory principles.

The Government accepts all the recommendations of the Macrory Review of Penalties. Government will carefully consider the implications of the Macrory recommendations for a tribunal to hear appeals against sanctions for regulatory non compliance particularly any funding implications and how they might best be addressed in taking forward the review's recommendations.

Copies to the report can be obtained from: http://www.cabinetoffice.gov.uk/regulation/reviewing_regulation/penalties/