Effectiveness and efficiency are key for any regulatory changes - Vicky Crichton

There’s been much discussion recently about the careful balancing act that is regulating private businesses. Whether its energy companies or media platforms, society has a clear interest in ensuring that companies follow certain rules to protect the public from harm, while not restricting consumer choice and the right of companies to make a fair profit for their services.

Of course, different levels of regulation apply in different sectors, depending on the risk to consumers and the public interest. Legal services are regulated because of their vital importance in supporting the rule of law and access to justice. That places some regulatory burdens on them to ensure they meet the required standards, but it also delivers certain privileges in terms of market access.

What is often less discussed is the cost of regulation to business, a cost that is ultimately passed on to consumers through the price of services. Unnecessary or disproportionate regulation may also stifle innovation which has the potential to reduce costs and improve consumer choice.

While some regulators are publicly funded, many, like the SLCC, are empowered to set a compulsory levy on the sector they regulate. It’s the responsibility of all regulators to be proportionate in the regulation they require and to provide value for money in how they discharge their functions. It’s also important that regulators are transparent and accountable for their work and its cost, allowing the public and the regulated community to scrutinise costs and to question and challenge their basis.

Vicky Crichton is Director of Public Policy, Scottish Legal Complaints Commission

That doesn’t mean, however, that it’s all about minimising regulatory costs. Sufficient investment is needed in regulatory processes to ensure they can function appropriately. In our own field, while complaints processes should be efficient as well as effective, underinvestment can lead to lengthy timescales, poor quality decisions or inadequate customer service. It’s a careful balancing act.

In addition, improvements in the quality or extent of regulation can lead to increased costs. For example, higher expectations of providers in adult social care and childcare have led to increased regulation at increased cost, but one that society deems appropriate given the nature of the work and its impact on our most vulnerable citizens.

What’s vital is that regulatory costs are transparent, proportionate and sustainable. Both the regulated sector and the public need to be able to see what contributes to and reduces regulatory costs to inform a genuine conversation about how to apportion costs across regulated individuals and entities, and how to target regulation based on risk. That debate should also consider the purpose of regulation, with transparency not just on costs but on what that funding achieves in terms of outcomes for consumers and the regulated community.

The recently introduced legislation to reform legal services regulation gives us just that opportunity. We need to ensure that regulation in the legal services sector is carried out in the public interest and that the interests of consumers are placed at the heart of the system. But it also needs to be responsive to business and enable innovation and improvement. Everyone agrees that change to out-dated, inflexible and over-complex regulation is needed and that it should improve effectiveness as well as efficiency. That’s a debate we’re looking forward to engaging in.

Vicky Crichton is Director of Public Policy, Scottish Legal Complaints Commission