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Being an Independent Regulator

image of Being an Independent Regulator

Regulators operate in a complex environment at the interface among public authorities, the private sector and end-users. As “referees” of the markets that provide water, energy, transport, communications, and financial services to citizens, they must balance competing wants and needs from different actors. This means that they must behave and act objectively, impartially, and consistently, without conflict of interest, bias or undue influence - in other words, independently. What distinguishes an independent regulator is not simply institutional design. Independence is also about finding the right balance between the appropriate and undue influence that can be exercised through the regulators’ daily interactions with ministries, regulated industries and end-users. This report identifies the critical points where undue influence can be exercised at different moments in the life of a regulator and discusses some of the avenues for developing a culture of independence, including through interactions with stakeholders, staffing and financing.

 

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Executive summary

Good governance practice requires assigning the right functions to appropriate and capable public institutions. There is value in separating some regulatory functions in public bodies, especially those related to administering or implementing regulation, from the policy-setting and fiscal policy functions that are exercised by government. The independence of these public bodies can contribute to the better functioning of the sectors and markets they oversee.

English

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