One risk the British Prime Minister's family doesn't have to deal with that others do: the risk that forgetting to take their passport to the airport will interfere with their travel plans.
Author Archives: caroline
Tony Blair spoke about better regulation, risk and the compensation culture this week. He gave a speech on Living with Risk at an event organised by the Institute for Public Policy Research and the Association of British Insurers. There's a lot in this speech, including a theme that worry about liability has got out of hand:
something is seriously awry when teachers feel unable to take children on school trips, for fear of being sued; when the Financial Services Authority that was established to provide clear guidelines and rules for the financial services sector and to protect the consumer against the fraudulent, is seen as hugely inhibiting of efficient business by perfectly respectable companies that have never defrauded anyone; when pensions protection inflates dramatically the cost of selling pensions to middle-income people; where health and safety rules across a range of areas is taken to extremes. Europe has done itself more damage through what is perceived as unnecessary interference than all the pamphlets by Eurosceptics could ever do
Blair recognises that much of the talk about the “compensation culture” may be just that, and that the risks of liability may be much less than people think, but he also acknowledges that public authorities sometimes respond in weird ways to the thought of the risk of liability.
Then there is a theme about risk. Blair doesn't want regulation to eliminate risk (if it were possible):
A natural but wrong response is to retreat in the face of this change. To regulate to eliminate risk. To restrict rather than enable. But we pay a price if we react like this. We lose out in business to India and China, who are prepared to accept the risks. We are unable to exploit our scientific discoveries. We seek protection from risks that are exaggerated or even imagined. We allow the conspiracy theorists to dictate the argument without a basis in fact.
So Blair wants the British people to be subject to the same levels of risk as if they were living in India or China?
There are to be a number of new initiatives including the Arculus suggestion of a “one in-one out” approach to regulation – every time a new rule is introduced an old one is eliminated and a new Compensation Bill to regulate claims farmers and (re)define negligence. And the media will be nobbled:
The media have a responsibility. MMR is one example. The present debate on mobile phones is another. We only narrowly avoided massive expenditure on SARS.
We need to involve the media in a better dialogue about risk. To that end, I have asked John Hutton to invite newspaper and broadcast editors to discuss with the Chief Medical Officer and the Government's Chief Scientist the best and most appropriate forum for ensuring that risk is communicated effectively so that the maximum information can be put into the public domain with the minimum of unnecessary alarm.
What the Government wants is as follows:
We should understand the nature of the decisions we take together, have a mature, reasoned debate between government, experts and people; a conversation between adults taking responsibility for the risks they face.
Sort of like the position with the decision to invade Iraq?
The subject of regulation is on the table in the UK these days. Gordon Brown has been talking about a Better Regulation Action Plan. This all makes me feel very old – I can't help but feel that I have heard all of this before – in the 1970s and 1980s and 1990s and in particular in 1997 when the Blair Government changed the terminology from deregulation to better regulation and set up the Better Regulation Task Force. The Blair Government inherited a 1994 statute, the Deregulation and Contracting Out Act which was supposed to facilitate the destruction of uunnecessary regulation. Then there was the Regulatory Reform Act 2001. But after the Arculus Report and the Hampton report (Dec. 2004 version) Gordon Brown now proposes a bill for “removing outmoded and unnecessary regulations” He says:
We will begin a widespread consultation with businesses to identify regulations that should be removed or simplified.
Some of Brown's other language reeks of Thatcherism:
A risk based approach helps move us a million miles away from the old assumption – the assumption since the first legislation of Victorian times – that business, unregulated, will invariably act irresponsibly. The better view is that businesses want to act responsibly. Reputation with customers and investors is more important to behaviour than regulation, and transparency – backed up by the light touch – can be more effective than the heavy hand.
So a new trust between business and government is possible, founded on the responsible company, the engaged employee, the educated consumer – and government concentrating its energies on dealing not with every trader but with the rogue trader, the bad trader who should not be allowed to undercut the good. And the risk based approach has wide application from environmental health, to financial services and even taxation.
No wonder the conservatives lost the election!
IOSCO isn't the only supranational financial standards setter which doesn't get input from consumers. In its first few years of existence, the EU's CESR (Committee of European Securities Regulators) didn't bother much about consumer views either. In March 2005 CESR held a “Consumer Day” to discuss the MiFID (Markets in Financial Instruments Directive). In a subsequent summary of the meeting CESR stated:
The importance CESR attaches to receiving comments on its advice from representatives of retail clients and consumers was stressed and CESR expressed its concern that the responses received to previous consultations carried out on MiFID, had not reflected sufficiently this set of stakeholders. CESR made it known that it intended to organise similar meetings in the future to continue and develop this dialogue further
The Consumer representatives who attended the meeting made some useful observations. They pointed out that they did not necessarily have the resources in terms of knowledge and staff to be able to prepare “considered responses” to consultations. They also suggested that it would be helpful if consultation papers were more “reader-friendly” and if they were translated from English into the different national languages in the EU.
This translation point is important and particularly critical in the EU which has been committed since the very early days to communicating with citizens in their own languages. Enlargement puts stresses on the EU's translation resources, and leads the EU to limit the number of documents that are translated into all of the official languages and to produce shorter pre-legislative documents. Publishing consultation papers only in English tends to favour people in the UK, and members of the elite who either read English or can afford to pay for translators.
The USA continued to hold hundreds of foreign detainees without charge or trial in the US naval base in Guantánamo Bay in Cuba. The refusal of the US authorities to apply the Geneva Conventions to the detainees and to allow detainees access to legal counsel or the courts violated international law and standards and caused serious suffering to detainees and their families. The ruling by the US Supreme Court in June that the US courts have jurisdiction to consider challenges to the lawfulness of such detentions appeared to be a step towards restoring the rule of law for the detainees, but the US administration sought to empty the ruling of any real meaning in order to keep the detainees in legal limbo. The USA also failed to clarify the fate or whereabouts of detainees that it held in secret detention in other countries.
Such serious abuses carried out by a country as powerful as the USA created a dangerous climate. The US administration’s unilateralism and selectivity sent a permissive signal to abusive governments around the world. There is strong evidence that the global security agenda pursued since 11 September 2001, the US-led “war on terror”, and the USA’s selective disregard for international law encouraged and fuelled abuses by governments and others in all regions of the world.
In many countries, new doctrines of security continued to stretch the concept of “war” into areas formerly considered law enforcement, promoting the notion that human rights can be curtailed when it comes to the detention, interrogation and prosecution of “terrorist” suspects.
The “security excuse”, whereby governments curtailed and abused human rights under the cloak of the “war on terror”, was particularly apparent in a number of countries in Asia and Europe. For example, thousands of members of the ethnic Uighur community were arrested in China as “separatists, terrorists and religious extremists”. In Gujarat, India, hundreds of members of the Muslim community continued to be held under the Prevention of Terrorism Act. In Uzbekistan, the authorities rounded up and detained hundreds of people said to be devout Muslims or their relatives, and sentenced many people accused of “terrorism-related” offences to long prison terms following unfair trials. In the USA, there have been reprehensible attempts by officials to argue that torture was not torture, or that the USA bore no responsibility for torture carried out in other countries, even if it had sent the victim there.
In November 2004 IOSCO (the International Organisation of Securities Commissions), which promulgates international standards for securities regulation, published a consultation document about its consultation procedures. The document contained a set of general objectives. The second of these stated that IOSCO would conduct public consultations:
To benefit from the expertise of market intermediaries, exchanges and other market operators, securities clearing and settlement system service providers, endusers and consumers, auditors and auditing companies, and other public authorities, international standard setters, international financial institutions, and regional development banks, when assessing and analyzing regulatory issues
IOSCO received a very limited number of public comments on this document. It is unclear how many private comments it received. The April 2005 Executive Committee Report on IOSCO Consultation Policy and Procedure does not mention consumers at all. Where the inclusive stakeholder paragraph appeared in the draft there now appears the following language:
To benefit from the expertise of the international financial community when assessing and analyzing regulatory issues.
What happened to the consumers? Is IOSCO just responding to the lack of comments by consumer groups or does the change in language reflect a change in policy? It's worth noting here that the International Bar Association's comments on the November draft emphasised that transparency in rule-making at the supranational level is important because:
It seems increasingly clear that the essential discussion of standards will take place at the IOSCO level rather than later at the home country level and that home country regulators will increasingly take the position that the standards adopted by IOSCO foreclose further discussion in the home country of the topics covered by these standards. This process is legitimate in democratic rulemaking when, and only when, those same principles have been fully vetted in a public manner at an international level.
In the same way, if IOSCO decides not to seek consumer input, then the consumer voice may be lost at the domestic level as well.