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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The why and the how of being an independent regulator
Understanding the benefits, challenges and the practical implications of independence is crucial for the performance of the regulator. However, fully understanding these different aspects of independence can be difficult. This chapter presents the methodology adopted to address some of these difficulties. It provides an overview of what independence is expected to bring to regulators and some key insights on the practical requirements and practices in place to safeguard independence.
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