The institutional setup for regulatory policy and oversight is a key enabler of effective regulatory frameworks. Oversightmechanisms are essential to bridge the gap between the establishment of formal requirements for using regulatory managementtools and their implementation in practice. While most countries have invested in regulatory oversight in line with the 2012Recommendation of the Council on Regulatory Policy and Governance at least to some extent, institutional mandates vary widelyacross the OECD membership. In many countries, several bodies share oversight responsibilities and the organisation of regulatoryoversight differs importantly across jurisdictions. With a view to clarify how regulatory oversight is carried out acrosscountries, this chapter provides a descriptive overview of the institutional landscape for regulatory policy with a specificfocus on regulatory oversight and quality control arrangements. It is based on a new data collection and case studies andlays the ground for further analytical work on the performance of regulatory oversight.
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The useof such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements inthe West Bank under the terms of international law.
Key findings
The institutional setup for regulatory policy and oversight is a critical enabler of effective regulatory frameworks. The2012 OECD Recommendation of the Council on Regulatory Policy and Governance (OECD, 2012[1]) outlines a wide range of oversight functions to promote high quality evidence-based decision making and enhance the impact of regulatory policy. These functions include the quality control of regulatory management tools; examining the potential for regulation to be more effective; contributing to the systematic improvement of the application of regulatory policy; co-ordination; training and guidance; and strategies for improving regulatory performance.
Regulatory oversight provides important impulses for the implementation of better regulation efforts. Regulatory oversightmechanisms incentivise civil servants to use regulatory management tools and follow due process to produce high-quality regulationsthat achieve their objectives and are aligned with long-term policy goals. Oversight also helps foster a whole-of-governmentperspective towards regulation and performs essential co-ordination activities to ensure a hom*ogenous approach to regulatorypolicy across the public administration.
OECD countries have invested in regulatory oversight in line with the 2012 Recommendation, although institutional setups varystrikingly across the OECD membership. All OECD countries have a body in place that covers at least one of the regulatoryoversight functions identified in the 2012 Recommendation. Responsibility for different oversight functions is frequentlysplit between several bodies within one jurisdiction. This raises the issue of effective co-ordination mechanisms betweenbodies with shared responsibilities and the merits and challenges of various organisations for regulatory policy tasks andresponsibilities.
A majority of regulatory oversight bodies is located within government, either at the centre of government or at a line ministry,drawing on their specific expertise in economic, legal or other areas. Other bodies are however also increasingly involvedin regulatory oversight and legal scrutiny functions. They include “traditional” players that are external to government,such as parliamentary bodies, supreme audit institutions, bodies that are part of the judiciary or located in the Office ofthe Attorney General. They also include bodies with less traditional features (i.e. non-departmental bodies), showing theinstitutional dynamism of countries in this area. For example, this group includes “arm’s length” bodies that are not subjectto the direction on individual decisions by executive government, but may be supported by a secretariat located within government;or bodies involving representatives from the government, the legislative branch and/or civil society. Further analytical workon the features of these bodies may be worthwhile to better understand their modus operandi and relationship with government,parliament and civil society.
Clearly, location also depends on the nature of the oversight functions. Functions supporting a whole-of-government approachto regulatory policy through co-ordination, the provision of guidance and training or the overall systematic improvement andadvocacy for regulatory policy are located within government in most cases. Bodies exercising quality control of regulatorymanagement tools are frequently located within government as well, but notably non-departmental bodies also play an importantrole for this function. In contrast, almost half of bodies tasked with the evaluation of regulations or the overall regulatorypolicy framework are non-departmental bodies or are located external to government.
Bodies responsible for the quality control of regulatory management tools focus most frequently on RIA. The scrutiny of stakeholderengagement processes and ex post evaluation practices is less widespread. Almost all bodies provide guidance and advice, and many of them issue formal opinionson the quality of regulatory management tools. About a third of quality control bodies have a sanctioning function that canhalt the regulatory process in case the quality of a tool is considered insufficient. In a majority of cases, this sanctioningfunction can be overturned by Cabinet or a high-level official. Generally, these bodies tend to intervene late in the rule-makingcycle, typically after the preferred policy solution has been identified and a first version of the draft/proposed regulationor evaluation has been prepared. The quality of their intervention could therefore be enhanced if their advice and feedbackwere embedded more systematically at an earlier stage of the rulemaking process.
There is still very little evidence on the impact of regulatory oversight on regulatory quality and societal well-being. Abouthalf of the bodies responsible for quality control of regulatory management tools have a mechanism in place to monitor andreport on their actions. Frequently, the number of reviews or interventions of the oversight body is tracked, while in-depthevaluations of the overall effectiveness of their activities remain scarce. Further analytical work could explore the conditionsfor effective regulatory oversight, including considerations of the features and capacities of the bodies as well as the roleof the socio-political context.
Introduction
This chapter aims to provide a mapping of the institutional landscape for regulatory policy across OECD countries with a specificfocus on regulatory oversight arrangements, building on the 2012 Recommendation. It does so relying on results from the 2017OECD survey on regulatory oversight bodies (for details see Box3.1). This survey is the first systematic collection of evidence on existing institutional frameworks for oversight of regulatorypolicy, on the roles different institutions have in the regulatory process and on their organisation, functions and powers.In addition, this chapter draws on insights from an expert paper defining and contextualising regulatory oversight (Renda and Castro, Forthcoming[2]) and from case studies developed with the 7 members of RegWatchEurope and the European Commission’s Regulatory Scrutiny Board(OECD, Forthcoming[3]).
Box 3.1. OECD Survey on regulatory oversight bodies
Data presented in this chapter are based on results of new survey questions complementing the 2017 Regulatory Indicators Survey.They gather information on bodies responsible for different oversight functions described Principle 3 of the 2012 Recommendation for all 35 OECD member countries, as well as accession countries (Colombia, Costa Rica and Lithuania) and the European Unionas of 31 December 2017.
The survey questions cover bodies, i.e. entities that are part of a line ministry/centre of government or that are structureswith a higher level of autonomy, at the national level of government with an explicit mandate or that carry out in practiceany of the following regulatory oversight functions (for details on the functions see Table3.1):
Quality control of regulatory management tools, i.e. reviewing the quality of individual regulatory impact assessments (RIA),stakeholder engagement processes, and ex post evaluations
Other regulatory oversight functions, including: Promoting the systematic improvement of, and advocacy for, regulatory policy,evaluating regulatory policy, providing guidance and training, identifying areas of policy where regulation can be made moreeffective and co-ordination on regulatory policy; and
Scrutiny of the legal quality of regulation under development.
Survey questions cover features of the institutional framework as well as key practices used to implement the respective functionsfor each body reported. For bodies responsible for the quality control of regulatory management tools, they collect answersto additional questions regarding the rationale for their establishment, governance arrangements, capacities and evaluationof their oversight activities.
A total of 163 bodies were reported by the 39 surveyed jurisdictions, of which 70 bodies are responsible for the quality controlof regulatory management tools and 77 are responsible for scrutinising the legal quality of draft regulations.
The location of bodies reported in the survey goes beyond the executive and includes e.g. parliamentary bodies, supreme auditinstitutions, bodies that are part of the judiciary or located in the Office of the Attorney-General. However, bodies outsidethe executive branch of governments are likely to be underrepresented in the sample given the strong focus on and reportingby governmental entities.
Furthermore, respondents were encouraged to report the smallest unit with responsibility for an oversight function, e.g. byreporting one or several specific divisions/units responsible for regulatory oversight functions within a ministry ratherthan reporting the entire ministry.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
What is regulatory oversight and why is it important?
Principle 3 of the 2012 Recommendation calls for countries to “establish mechanisms and institutions to actively provide oversight of regulatory policy procedures and goals, support and implement regulatory policy and thereby foster regulatory quality”. The 2012 Recommendation highlights the importance of “a standing body charged with regulatory oversight (…) established close to the centre of government, to ensure that regulation serves whole-of-government policy. The specific institutional solution must be adapted to each system of governance.” The 2012 Recommendation outlines a wide range of institutional oversight functions and tasks to promote high quality evidence-based decision making and enhance the impact of regulatory policy. These tasks and functions include: quality control; examining the potential for regulation to be more effective; contributing to the systematic improvement of the application of regulatory policy; co-ordination; training and guidance; and strategies for improving regulatory performance.
In line with the 2012 Recommendation, the definition of “regulatory oversight” in this chapter adopts a mix between a functionaland an institutional approach. “Regulatory oversight” is defined as the variety of functions and tasks carried out by bodies/ entities in the executive or at arm's length from the government in order to promote high-quality evidence-based regulatorydecision making. Following the 2012 Recommendation and the 2015 Outlook, these functions can be categorised in 5 areas (Table3.1).
These functions need not be carried out by a single institution / body. De facto, countries have reported a wealth of organisationsresponsible for the variety of oversight functions provided for in the 2012 Recommendation at different locations. While some institutions are common across countries, a number of countries report bodies that areless traditional. For example, a few countries reported ministries scrutinising the assessment of specific impacts analysedas part of RIA, or research institutes or hybrid bodies composed of members from different institutions within or externalto government. Beyond the specificity of every institutional framework, countries do not yet share a common understandingof regulatory oversight and its scope. This variation in understanding has translated in differences in the reporting of bodiesduring the survey phase. It argues for further work among countries to refine the understanding of regulatory oversight, reflectingback on the 2012 Recommendation and building on key empirical findings from the survey exercise and further analytical workon the role of regulatory oversight.
Table 3.1. Regulatory oversight functions and key tasks | |
|---|---|
Areas of regulatory oversight | Key tasks |
Quality control (scrutiny of process) | Monitor adequate compliance with guidelines / set processes Review legal quality Scrutinise impact assessments Scrutinise the use of regulatory management tools and challenge if deemed unsatisfactory |
Identifying areas of policy where regulation can be made more effective (scrutiny of substance) | Gather opinions from stakeholders on areas in which regulatory costs are excessive and / or regulations fail to achieve itsobjectives Reviews of regulations and regulatory stock Advocate for particular areas of reform |
Systematic improvement of regulatory policy (scrutiny of the system) | Propose changes to improve the regulatory governance framework Institutional relations, e.g. co-operation with international for a Co-ordination with other oversight bodies Monitoring and reporting, including report progress to parliament / government to help track success of implementation ofregulatory policy |
Co-ordination (coherence of the approach in the administration) | Promote a whole of government, co-ordinated approach to regulatory quality Encourage the smooth adoption of the different aspects of regulatory policy at every stage of the policy cycle Facilitate and ensure internal co-ordination across ministries / departments in the application of regulatory management tools |
Guidance, advice and support (capacity building in the administration) | Issue guidelines and guidance Provide assistance and training to regulators/administrations for managing regulatory policy tools (i.e. impacts assessmentsand stakeholder engagement) |
Source: Based on (OECD, 2012[1]), Recommendation of the Council on Regulatory Policy and Governance, OECD Publishing, Paris, www.oecd.org/gov/regulatory-policy/2012-recommendation.htm (accessed 23March 2018) (OECD, 2015[4]), Regulatory Policy Outlook 2015, OECD Publishing, Paris, https://doi.org/10.1787/9789264238770-en. | |
In particular, while the survey upon which this chapter is based aimed at mapping the broader landscape of responsibilitiesfor regulatory policy across OECD countries, a narrower definition of regulatory oversight may be needed to guide policy makersin the establishment of effective oversight. Castro and Renda argue for a sharper definition based on a distinction between“core” and “non-core” functions of regulatory oversight (Renda and Castro, Forthcoming[2]). According to the authors, “such distinction is needed in order to avoid conflating under the same umbrella definition toomany institutions, dealing with aspects that are not essential to the function of regulatory oversight and to the smooth functioningof the regulatory governance cycle”. The proposed allocation of functions across “core” and “non-core” functions is summarisedin Box3.2. The detailed analysis is carried out in (Renda and Castro, Forthcoming[2]).
Box 3.2. List of core and non-core oversight functions proposed by Renda and Castro
Core functions:
Quality control
Co-ordination
Evaluation of implementation of regulatory policy tools (but not evaluation of entire framework)
Guidance (but not training)
Non-core functions:
Identifying areas where regulation can be made more effective
Systematic improvement of regulatory policy (propose changes to framework, institutional relations).
Training (but not guidance)
Legal oversight
Source: Based on (Renda and Castro, Forthcoming[2]), “Defining and Contextualising Regulatory Oversight and Co-ordination”, OECD, Paris.
In fine, the scope of regulatory oversight should be understood with respect to its capacity and effectiveness to promotehigh-quality evidence-based regulatory decision making. In this perspective, some of the functions highlighted in Table3.1 may be more critical than others or may be complementary to others. Improving the understanding of what ultimately mattersin regulatory oversight to effect change would help countries prioritise the needed institutional reforms. This chapter supportsthis objective by providing a picture as of December 2017 of the institutional set-up for regulatory oversight functions acrosscountries and the organisation of bodies tasked with quality control.
The need for regulatory oversight is collateral to the uptake of regulatory policy across countries, i.e. of a political commitment on the part of governments to act in a transparent, responsive and adaptive way, and based on the best-available evidence. Such a commitment implies time-consuming and resource-intensive processes, extensive information-sharing within the administration across ministries, departments and agencies and a very committed administration. Ultimately, these factors justify the institutionalisation of oversight functions close to the centre of government. Castro and Renda identify four reasons to embed oversight capacity in this location (Renda and Castro, Forthcoming[2]):
Quality control places incentives on civil servants to better and more consistently use instruments such as RIA, consultationand expost evaluation. Simply mandating that administrations follow a due process and produce high quality documents is not enough toensure that this will happen in practice.
Strong oversight from within government helps governments align their incentives with the administration. Through enhancedregulatory control, governments can secure that administrations will use better regulation instruments in support of the statedgovernment long-term policy goals.
While ministries, departments or agencies work on their specific policy portfolios, only the centre of government can developa whole-of-government approach to regulation, including stock and flow.
Regulatory policy and governance require a set of co-ordination activities, which are best performed at the central levelto ensure hom*ogeneous understanding and practices. They include for example the organisation and delivery of training to civil servants; the drafting of guidelines on how to perform regulatory impactanalysis, expost evaluation, risk analysis or any other specific analysis of the impacts of legislation; the establishment of minimum standardsfor consultation of stakeholders; the overall regulatory planning to be carried out for the whole administration.
Figure 3.1. Rationale for establishing a body responsible for quality control of regulatory management tools
Notes: This figure is based on information available for 70 bodies reported in the survey and for all OECD countries, as well asColombia, Costa Rica, Lithuania and the European Union. No data available for Chile, Hungary, Ireland and Luxembourg, as thesecountries did not report a body responsible for quality control of regulatory management tools.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Findings from the OECD survey confirm that countries have established oversight bodies with the aim of enhancing overall regulatoryquality, increase transparency and support the implementation of regulatory management tools. Overwhelmingly (in 4 out of5 cases), the rationale for establishing a body responsible for quality control of RIA, stakeholder engagement or expost evaluation is to broadly promote regulatory quality (Figure3.1 above). Burden reduction and business facilitation come second, just before strengthening transparency and participation.
The institutional setup for regulatory policy and organisation of regulatory oversight functions
The survey shows clear signs that countries invest in regulatory oversight in line with Principle 3 of the 2012 Recommendation. All jurisdictions surveyed report to have bodies in place that cover at least one of the regulatory oversight functions identifiedin the 2012 Recommendation. In particular, virtually all countries have in place a body responsible for RIA quality control.Quality control of stakeholder engagement and expost evaluation, while not uncommon, is less widespread (59% of bodies report having a body responsible for scrutinising stakeholderengagement, and less than half of all jurisdictions have a body responsible for the quality control of ex post evaluation). Similarly, only about three quarters of countries have established a body responsible for identifying areas whereregulation can be made more effective, and for co-ordinating regulatory policy (Figure3.2).
Interestingly, in a substantial number of cases, regulatory oversight is not an exclusive focus of the responsible bodies.A third of surveyed bodies report to only be responsible for regulatory oversight functions. Two thirds of these bodies alsocarry out other tasks.
Figure 3.2. Coverage of regulatory oversight functions in countries
Note: This figure is based on information available for all OECD countries, as well as Colombia, Costa Rica, Lithuania and theEuropean Union.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Surveyed bodies tend to cumulate and combine different oversight functions (Figure3.3). Responsibility for quality control of regulatory management tools is frequently coupled with at least one other function(28%), while bodies that focus exclusively on regulatory quality control functions are rare. Other regulatory oversight functionsbesides quality control tend to be complementary. In particular, about half of the bodies responsible for the systematic improvementand advocacy for regulatory policy are also in charge of the evaluation of regulatory policy, or the provision of guidanceand training of regulatory management tools.
In contrast, combined responsibility for regulatory and legal oversight is not widespread. For about a fourth of surveyedbodies, the scrutiny of legal quality is their sole responsibility. Only a small number of bodies cover the range of all oversightfunctions covered in the OECD survey, including quality control, other regulatory oversight functions and legal scrutiny (14%).The combination of responsibilities for legal scrutiny and quality control of regulatory management tools, or legal scrutinyand one of the other oversight functions is not very frequent either (1% and 9% respectively).
Figure 3.3. Combination of oversight functions carried out by bodies
Notes: Other regulatory oversight functions are the systematic improvement and advocacy for regulatory policy, evaluation of regulatorypolicy, providing guidance and training in regulatory management tools, identifying areas where regulation can be made moreeffective, and co-ordination of regulatory policy. This figure is based on information available for 160 bodies reported inthe survey and for all OECD countries, as well as Colombia, Costa Rica, Lithuania and the European Union.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Responsibility for oversight functions is frequently split between several bodies (Figure3.4). In some countries, up to 6 bodies may share the responsibility for one oversight function. This illustrates the fact that institutional mandates vary widely across countries. At the same time, this raises the issue of effective co-ordination mechanisms between bodies with shared responsibilities and the merits and challenges of a fragmented institutional landscape for regulatory policy. On average, close to two different bodies are responsible for the quality control of regulatory management tools, the systematic improvement of regulatory policy, guidance and training and the scrutiny of legal quality. The average is slightly lower for the evaluation of regulatory policy and the identification of areas where regulation can be made more effective. The average of bodies responsible for the co-ordination of regulatory policy is close to one, which confirms that jurisdictions tend to designate a single authority to co-ordinate regulatory policy. This confirms findings from Chapter 2 that most surveyed jurisdictions have designated high-level responsibility for regulatory policy from a whole-of-government perspective as outlined in Principle 1 of the 2012 Recommendation.
Figure 3.4. Number of bodies responsible for different oversight functions
Note: This figure is based on information available for all OECD countries, as well as Colombia, Costa Rica, Lithuania and theEuropean Union.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
A majority of surveyed bodies are located within government (Figure3.5). In particular, a third of bodies in the sample are located at the centre of government. Many jurisdictions also have anadditional body with responsibility for oversight functions in another part of government, such as the Ministry of Economy/Finance/Treasury,or the Ministry of Justice, drawing on line ministries’ specific expertise in economic, legal or other matters. These trendslargely confirm the observations made on the locations of bodies in charge of regulatory oversight within government in 2014.
Bodies external to government are however also involved in regulatory and legal oversight functions. They include parliamentarybodies, supreme audit institutions and bodies that are part of the judiciary. Two countries report bodies located in the Officeof the Attorney General.
Finally, close to half of jurisdictions report non-departmental bodies that may be situated within or external to government,but are not directly traditional ministry entities or parliamentary/judiciary bodies. This group includes inter alia governmentalor non-governmental arm’s length bodies that are not subject to the direction on individual decisions by executive government,but may be supported by a secretariat located within government; and mixed bodies that may involve representatives from thegovernment, the legislative branch and/or civil society (academia, business, other) (see Box3.3 for a list of non-departmental bodies identified in the survey). Given their non-traditional features, these bodies are groupedinto a separate category. Further work is needed to more clearly analyse the features of these bodies and determine sub-typesamong this group.
Figure 3.5. Location of bodies with oversight functions
Notes: This figure is based on information available for 161 bodies reported in the survey from all OECD countries, as well asColombia, Costa Rica, Lithuania and the European Union. Data presents the number of jurisdictions with at least one body ina particular location.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
An analysis of the location of bodies across different oversight functions shows both evidence of centralisation of responsibilitiesin one location, as well as some clear patterns of specialisation. Bodies located within government tend to have overlappingresponsibilities for several oversight functions. Centres of government, in particular, cover a diverse range of oversightresponsibilities with no particular predominant oversight function. Bodies located at Ministries of Economy/Finance/Treasuryalso have a broad range of oversight responsibilities. They nevertheless most frequently focus on quality control of regulatorymanagement tools, the provision of guidance and training, and promoting the systematic improvement of regulatory policy. Theyalmost never deal with legal quality. For Ministries of Justice, in contrast, a clear pattern of specialisation can be identified,as all of them are involved in the scrutiny of legal quality.
Specialisation is even clearer for regulatory oversight bodies that are not located within government. Supreme audit institutionsare most frequently involved in the evaluation of regulatory policy. Two out of 6 reported supreme audit institutions areresponsible for identifying areas where regulation can be made more effective, or for the scrutiny of legal quality. Noneof the reported supreme audit institutions is responsible for quality control. More than half of the parliamentary bodiesincluded in the survey are responsible for the scrutiny of legal quality, nine out of twenty parliamentary bodies have a responsibilityto identify areas where regulations’ effectiveness can be enhanced, and four parliamentary bodies evaluate regulatory policy.Both parliamentary bodies and supreme audit institutions are rarely involved in providing training and guidance. Non-departmentalbodies are most prominently tasked with the quality control of regulatory management tools. About half of them are responsiblefor identifying areas where regulation can be made more effective.
Box 3.3. Composition of the group of non-departmental bodies reported in the OECD survey
Seven members of RegWatchEurope: ATR (Netherlands), Czech RIA Board, Finnish Council of Regulatory Impact Analysis, Germany’sNKR, Norwegian Better Regulation Council, Swedish Better Regulation Council, UK Regulatory Policy Committee
Australia’s and New Zealand’s Productivity Commissions
Czech Government Legislative Council
Danish Business Forum for Better Regulation and EU Implementation Council
EU Regulatory Scrutiny Board
French Conseil national d’évaluation des normes
Iceland’s Consultative Committee on Public Inspection Rules
Ireland’s Law Reform Commission
Japan’s Fair Trade Commission
Korea’s Regulatory Research Centers at the Korea Development Institute and the Korea Institute of Public Administration
Councils of State of Luxembourg and Spain
New Zealand’s Legislation Design and Advisory Committee (LDAC)
Portuguese Administrative Modernisation Agency
Swedish Agency for Economic and Regional Growth
Swiss SME Forum
UK Law Commission
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Quality control of regulatory management tools
Responsibility for the quality control of regulatory management tools frequently seems to be assigned to bodies within government.In line with the 2012 Recommendation, a great number of bodies in charge of scrutinising the quality of RIA, stakeholder engagementor expost evaluation is located at the centre of government (25out of 70, representing 21 countries) (Figure3.6). Some jurisdictions therefore have more than one body in place at the centre of government. A substantial number of jurisdictionshave a body located in another part of government, such as the Ministry of Economy/Finance/Treasury. In a few jurisdictions,parliamentary bodies or bodies that are part of the judiciary scrutinise the quality of regulatory management tools. No supremeaudit institutions or bodies located at the Office of the Attorney General are involved in regulatory quality control.
Among non-departmental bodies, “arms’ length” bodies dedicated to regulatory oversight, such as the members of RegWatchEurope,form the greatest group. It is worth noting that compared to 2014, this group has even grown further, due to the establishmentof a number of new such bodies in Norway (with the Norwegian Better Regulation Council) and in Finland (the Finnish Councilon Regulatory Impact Analysis), for example.
Figure 3.6. Location of bodies responsible for quality control of regulatory management tools
Note: This figure is based on information available for 70 bodies reported in the survey responsible for quality control of regulatorymanagement tools.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Oversight bodies in charge of quality control of regulatory management tools focus mostly on RIA (Figure3.7). By contrast, oversight of the quality of stakeholder engagement and of ex post evaluation is less developed. For a third of the bodies responsible for quality control, quality control of RIA is the onlyfocus. For bodies responsible for more than one tool, the quality control of stakeholder engagement and expost evaluation is almost always coupled with RIA quality control as well. Only 5 of the 70 reporting bodies do not have RIA intheir portfolio and focus on the scrutiny of stakeholder engagement processes only.
Figure 3.7. Regulatory management tools covered by bodies responsible for quality control
Note: This figure is based on information available for 70 bodies reported in the survey responsible for quality control of regulatorymanagement tools.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Other regulatory oversight functions
The majority of bodies responsible for other regulatory oversight functions is located within government, although to a varyingdegree depending on the individual function (Figure3.8). Functions supporting a whole-of-government approach to regulatory policy through the provision of guidance and trainingor the overall systematic improvement and advocacy for regulatory policy are located within government in about four out offive cases. Bodies with co-ordination functions are virtually all located within government. Centres of government play aparticularly dominant role in carrying out these responsibilities: more than half of the bodies with a co-ordination function,and almost 40% of bodies in charge of systematic improvement or guidance and training are located there.
Almost half of bodies that evaluate regulatory policy or identify areas for regulatory improvement are non-departmental bodies or located external to government. Non-departmental bodies make up a quarter of the bodies with these functions. Both supreme audit institutions and parliamentary bodies seem to play an important role in the evaluation of regulatory policy in some jurisdictions. In addition, parliamentary bodies seem to be particularly involved in identifying areas where regulation can be made more effective.
Figure 3.8. Location of bodies responsible for other regulatory oversight functions
Note: This figure is based on information available for 161 bodies reported in the survey.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Bodies responsible for the systematic improvement and co-ordination of regulatory policy use different practices to implementtheir mandates. Four out of five bodies responsible for the systematic improvement of regulatory policy propose changes tothe regulatory policy framework, promote the use of good regulatory practices with relevant institutions and stakeholders,and ensure institutional relations, such as through co-operation in international fora. Less than half of the bodies in chargeof this function also promote good regulatory practices at subnational levels. Bodies responsible for co-ordinating regulatorypolicy typically provide a co-ordinating platform and facilitate the sharing of information and evidence on the use of regulatorymanagement tools. About half of the bodies responsible for co-ordination check if the lead ministry has consulted with otherline ministries in the application of regulatory management tools.
Bodies providing guidance and training focus mostly on RIA (Figure3.9), mirroring the emphasis on RIA in bodies’ responsibilities for the quality control of regulatory management tools. Whiletwo thirds of bodies with a training/guidance function offer support on RIA, this is only the case for less than half of thebodies for other regulatory management tools.
Bodies responsible for identifying areas for regulatory improvement focus to a great extent on gathering inputs through consultationand evaluations. About half of the bodies with responsibility for this function gather opinions from stakeholders or advocatefor particular areas of regulatory reform. 40% of them carry out analyses of the stock and/or flow of regulation. Finally,some bodies carry out in-depth reviews, i.e. comprehensive reviews focusing on the nature and extent of regulation in specificindustries policy areas or sectors and its effects.
Figure 3.9. Focus of training and guidance function
Note: This figure is based on data for a total of 76 bodies reported in the survey that are responsible for guidance and training.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Scrutiny of legal quality of regulation
The legal quality of regulation in development is most frequently scrutinised by bodies at the centre of government (23 out of 76 bodies, representing 26countries) or in the Ministry of Justice (in 11 countries) (Figure3.10). At the same time, in six jurisdictions parliamentary bodies also look at the legal quality of draft regulations as partof their mandate.
Figure 3.10. Location of bodies responsible for legal scrutiny
Note: This figure is based on information available for 76 bodies reported in the survey responsible for the scrutiny of legalquality.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
The greatest share of bodies focus exclusively on the legal quality of draft regulations prepared by government. Two out offive surveyed bodies scrutinise primary laws initiated by the executive and subordinate regulations, but do not cover primarylaws initiated by parliament. Virtually all bodies included in the survey look at the coherence of regulations with the existingbody of law. Most of them also look at plain language drafting (81%), the coherence with international obligations (76%) andconstitutionality (75%).
How are oversight bodies organised to deliver on their mandate?
The mandate of regulatory oversight bodies
The evidence points to a strong legal anchoring of bodies with oversight functions. Indeed, the mandate of a majority of bodiesis established either in law or statutory requirement, or alternatively in a presidential or cabinet directive (Figure3.11). The mandate of a few bodies cited is enshrined in the country’s Constitution, e.g. in the case of supreme audit institutionsor governmental advisory bodies like councils of state. 92% of bodies cited in the survey have a permanent mandate.
About half of the surveyed bodies indicate that their mandate for regulatory oversight has been revised or extended over time.For bodies responsible for quality control, mandates have frequently been extended to scrutinise regulatory management toolsfor a greater share or different kinds of regulatory instruments (e.g. to cover also parliamentary legislative initiativesin addition to regulations initiated by the executive), or to further elements of RIA (see for example the case studies ofRegWatchEurope members, (OECD, Forthcoming[3])).
In other cases, mandates have been extended to give bodies additional responsibilities as part of an overall reform or extensionof the regulatory policy framework. For example, Italy overhauled its regulatory framework of RIA, expost evaluation and consultation in 2017. In this context, the role of the Department of Legal and Legislative Affairs at thecentre of government (DAGL) has been strengthened with regards to co-ordination, oversight and promotion of regulatory policyacross the regulatory cycle. DAGL can issue negative opinions and return RIAs for revision if they are deemed inadequate,and validates ministries’ programmes regarding planned RIAs, consultations, exemptions from RIA; and expost evaluations. With the introduction of a stock-flow linkage rule in France in 2017, the Secrétariat Général du Gouvernement has become responsible for overseeing its implementation.
In a few cases, mandates have been refined rather than extended to streamline bodies’ oversight functions. This is e.g. thecase for the new Dutch oversight body ATR, who is involved earlier in the rulemaking process and has a greater focus on theexante scrutiny of regulatory proposals than its predecessor Actal. Similarly, the Swedish Better Regulation Council (SBRC)’s mandate has been revised in 2015 to focus more strongly on the quality of impact assessments, while responsibility for the provision of training and support were given to the Swedish Agency for Economic and Regional Growth. Some changes in mandates were reportedly introduced to strengthen the co-ordination of the use of Better Regulation tools across government, or to sustain the autonomy and capacities of the bodies. This is e.g. the case for the European Commission’s Regulatory Scrutiny Board, which, unlike its predecessor, the Impact Assessment Board, comprises members recruited from outside the European Commission and has a broader mandate for scrutiny and more resources at its disposal.
Figure 3.11. Source of regulatory oversight bodies’ mandate
Note: This figure is based on information available for 149 bodies reported in the survey.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Governance arrangements of bodies responsible for the quality control of regulatory management tools
Governance arrangements for bodies responsible for quality control seem to differ for bodies depending on their location.Differences are manifest for selection processes for the body’s management (Figure3.12), the authority over the body’s budget (Figure3.13), as well as reporting obligations on their activities (Figure3.14).
Figure 3.12. Selection process for the management structure of bodies responsible for quality control of regulatory management tools
Note: This figure is based on information available for 45 bodies reported in the survey responsible for quality control of regulatorymanagement tools.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
The management of two thirds of bodies within government is appointed directly by government, while this is the case for about a third of non-departmental bodies or bodies external to government. Open hiring processes are used to recruit bodies’ management for about a quarter of the bodies within government. The management of non-departmental bodies or those external to government is recruited through open hiring processes in less than 20% of cases. Seven bodies located external to government (44%) report using other mechanisms to select their board members. These include elections by parliament (e.g. for parliamentary bodies) and/or by representatives from subnational governments (e.g. for the French Conseil national d’évaluation des normes which scrutinises impacts on regional and local authorities), or appointments made by the head of the body.
The authority responsible for determining bodies’ budgetary envelopes also tends to differ for bodies within and externalto government. The budget of 60% of the bodies within government is determined by the centre of government or a line ministry,while this is only true for 30% of the other bodies. The budget about 40% of non-departmental bodies or bodies external togovernment is assigned by parliament. Budgets are appropriated on an annual basis for more than three quarters of bodies inthe sample.
Quality control bodies located within government report less frequently on their activities than non-departmental bodies orbodies external to government. Non-departmental bodies or bodies located external to government almost all report on theiractivities either formally or publicly. In most cases these bodies report to government. In contrast, a third of bodies withingovernment do not have a formal reporting obligation, nor do they report publicly on their activities.
Figure 3.13. Authority responsible for deciding on quality control body’s budgetary envelope
Note: This figure is based on information available for 65 bodies reported in the survey responsible for quality control of regulatorymanagement tools.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Figure 3.14. Reporting obligations of bodies responsible for quality control of regulatory management tools
Note: This figure is based on information available for 67 bodies reported in the survey responsible for quality control of regulatorymanagement tools.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
The resources of oversight bodies responsible for quality control
Information on resources (staff and budget) is available for only about half of bodies responsible for the quality controlof regulatory management tools. Many of them report challenges in providing exact figures for the staff and budget specificallydedicated to oversight functions. A number of bodies report not to have dedicated capacities for regulatory oversight functions.Rather, the staff working in the responsible units takes on regulatory oversight tasks as part of their overall portfolio.This is especially true for those bodies that are part of a department/agency responsible for other functions in additionto regulatory oversight. Hence, many bodies report the staff and budget for the overarching entity rather than resources dedicatedto regulatory oversight.
Bodies that have been specifically established as regulatory oversight bodies (independently of their location) report annualbudgets between one and two million euros and an average secretariat size of ten analytical staff (ranging from none to 17).This includes the members of the RegWatchEurope network, with the exception of the Finnish Council on Regulatory Impact Analysis,whose budget is significantly smaller, and the Czech RIA Board, which does not have a dedicated budget for its oversight functions(OECD, Forthcoming[3]). Outside of Europe, COFEMER in Mexico has a comparatively large budget (EUR3.3 million) and number of employees (87).
Government Units rarely report more than ten full-time analyst staff. In a third of cases, they report less than five full-timeemployees responsible for the quality control of regulatory management tools. The exceptions are Canada’s Regulatory AffairsSector at the Treasury Board Secretariat, the US Office of Information and Regulatory Affairs in the Office of Managementand Budget, and the European Commission’s Secretariat-General, with between 20 and 50 staff. The Korean Regulatory ReformOffice at the Prime Minister’s Office which functions as the secretariat of the Regulatory Reform Committee reports 85 staff.
Annual budgets also depend on the nature and scope of the additional functions carried out by the oversight bodies. Government units exclusively dedicated to regulatory oversight within existing institutions comparatively report smaller budgets, of between 300000 and 650000 Euros. New Zealand’s Regulatory Quality Team in the Treasury (EUR900000) and the Better Regulation Division in the Israeli Prime Minister’s office (almost EUR 2 million) constitute exceptions. By contrast, the largest budgets are reported by institutions that have a range of different co-ordination, policy evaluation or advice functions beyond regulatory oversight.
Scope and powers for quality control
Scope and focus of scrutiny
Surveyed bodies focus in particular on scrutinising regulatory management tools for regulations originating from the executive.Almost all bodies indicate to scrutinise RIAs, stakeholder engagement processes and expost evaluations for primary laws initiated by the executive or subordinate regulations. In contrast, less than 20% of bodiesscrutinising RIA or stakeholder engagement look at the use of these tools for primary laws initiated by parliament. Abouta third of bodies scrutinising expost evaluations looks at evaluations of laws that were initiated by parliament.
A majority of bodies doing RIA quality control look at all RIAs prepared. Only 11% of bodies report to review RIAs for allregulations with significant impact. More than a quarter of bodies review only selected RIAs. In these cases, the significanceof a draft regulation frequently plays a role in selecting which RIAs will be reviewed.
Bodies in charge of quality control for RIA overwhelmingly focus on the quality of evidence and compliance with procedures(Figure3.15). This is an important point that shows their value in supporting a decision making process by opposition to being a policy-makingbody. However, in their support to the quality of evidence, RIA oversight bodies focus to a greater extent on the assessmentof regulatory costs and impacts for businesses rather than on the assessments of benefits of regulation and impacts on citizens.The calculations of administrative burdens or substantive compliance costs are assessed by most bodies included in the survey,albeit with a much greater focus on business (56 out of 65 bodies) than on citizens (46 out of 65 bodies). Benefit calculationsare assessed more rarely by oversight bodies with a similar focus on businesses rather than citizens. These results may pointto the partiality of the mandate of regulatory oversight, but also to the methodological issues that some of these assessmentsmay raise.
Figure 3.15. Elements of RIA scrutinised
Note: This figure is based on information available for 65 bodies reported in the survey responsible for quality control of regulatorymanagement tools.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Scrutiny of stakeholder engagement processes and expost evaluations of regulation focuses mostly on the correct use of these tools in line with formal requirements. For the scrutinyof stakeholder engagement, most bodies report to look at the overall quality of the engagement process and its results, frequentlyincluding whether and how views received during the consultation process have been taken into account, and which stakeholdergroups were consulted in the process. Besides the compliance with formal requirements, bodies scrutinising the quality ofexpost evaluations tend to focus on the accuracy of different elements of the evaluation, such as the methodology used, the calculationof expected and achieved results, or the estimation of costs. In a few cases, bodies report to scrutinise the involvementof stakeholders in the evaluation process, or whether the evaluation has made an effort to look into opportunities to reduceregulatory burden.
Quality control mechanisms and powers
Countries can choose from a range of quality control mechanisms to match their institutional setup and legislative culture. Oversight bodies may play an important role in guiding regulators in the use of regulatory management tools by providing advice and support in the preparation process – a case that (Renda and Castro, Forthcoming[2]) define as friendly “advisor”. Advice can be provided in direct exchange with administrators and/or in the course of severalfeedback rounds. Bodies in charge of quality control may also issue opinions on the quality of regulatory management toolswhich may result in more or less binding consequences (Table3.2). Formal opinions can be kept confidential to provide regulators with feedback and guidance on the use of the regulatorymanagement tool and track implementation. Opinions can also be made publicly available to share signals on the quality oftools with a broader audience outside of government and provide an additional level of pressure to ensure quality. When abody issues an opinion, regulators are invited to consider it, but not required to take specific action if the opinion isnon-favourable. They may choose to ignore it and proceed with the legislative process or the preparation of the expost evaluation.
Table 3.2. Mechanisms for quality control | |||
|---|---|---|---|
SOFT Challenge function HARD | |||
Advice and feedback | Formal opinion | Sanctioning function that can be overturned | Sanctioning function that cannot be overturned |
Body provides advice and feedback on the use of the regulatory management tool during the development of a regulation or thepreparation of an ex post evaluation | Body can issue a formal opinion on the quality of the regulatory management tool, either publicly or internally | Body can formally ask administrators to redo/revise the regulatory management tool if the quality is deemed insufficient | Body has to give a positive opinion/approve the regulatory management tool for the regulation/evaluation to proceed |
Does not trigger a specific process requiring regulators to revise the regulatory management tool, i.e. they can ignore itand go ahead with the regulation/evaluation | Does not trigger a specific process requiring regulators to revise the regulatory management tool, i.e. they can ignore itand go ahead with the regulation/evaluation | Triggers specific process by which regulators have to revise the regulatory management tool and/or take specific decisionto acknowledge the negative opinion and overturn it | The regulation/evaluation cannot go ahead until the body has issued a positive opinion. A negative opinion cannot be overturnedby any other body |
E.g. oversight body provides feedback and answers questions regarding the methodology used to calculate certain impacts | E.g. RIA is deemed inadequate (and body makes it public). Ministers decide to move forward anyway. | E.g. RIA is deemed inadequate and body asks for a revision. Administrator revises RIA, which then gets positive opinion or competent authority (e.g. Cabinet, Head of Government, Minister, etc.) actively decide to overturn the negative opinion | E.g. RIA is deemed inadequate and body asks for a revision. The regulation will not pass until a positive opinion is issued. |
Bodies for quality control may also exercise a sanctioning function,1 i.e. have the possibility to stop a regulation or evaluation from proceeding to the next stage if the tool’s quality is consideredinadequate, a situation that (Renda and Castro, Forthcoming[2]) characterise as “adversarial gatekeeper”. Bodies with a sanctioning function can formally ask administrators to revise theuse of the regulatory management tool if its quality is deemed insufficient. A negative opinion triggers a specific processfor the revision of the tool and/or requires an active decision (e.g. from Cabinet, the Head of Government, Minister, etc.)to overturn the negative opinion and proceed to the next stage. In some cases, the body’s negative opinion cannot be overturned,i.e. the body has to approve the use of the regulatory management tools before a regulation/evaluation can proceed to thenext stage.
Evidence shows that bodies responsible for quality control use a mix of approaches and powers to ensure the quality and impactof their action (Figure3.16). The use of mechanisms seems to follow a “Matroschka principle”, i.e. functions are nested. Nearly all surveyed bodies havean advice function, i.e. they report using support and advice mechanisms to build capacity for the use of regulatory managementtools. A substantial number of these bodies issues formal opinions that are either kept confidential or are made publiclyavailable. Formal opinions on the quality of regulatory management tools are issued by almost all RIA quality control bodies,and also by about two thirds of bodies responsible for reviewing stakeholder engagement and ex post evaluation. However, in 40% to 50% of cases, formal opinions are not made public.
Finally, about a third of bodies responsible for reviewing regulatory management tools have a sanctioning function, i.e. theauthority to prevent a regulation from proceeding to the next stage.2 This sanctioning mechanism is consistent across regulatory management tools, i.e. bodies with a sanctioning function forstakeholder engagement and ex post evaluation also have a sanctioning function for RIAs. This sanctioning function can be overturned in a majority of cases,e.g. by Cabinet, the responsible Minister or a high-level official. However, in eleven cases, the bodies report that theirsanctioning function for RIA, stakeholder engagement or expost evaluation cannot be overturned.3
Figure 3.16. Powers of bodies responsible for quality control
Note: This figure is based on information available for 70 bodies reported in the survey responsible for quality control of regulatorymanagement tools.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Timing of intervention
Figure 3.17. Timing of RIA quality control
Note: This figure is based on information available for 67 bodies reported in the survey responsible for quality control of regulatorymanagement tools.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Oversight bodies in charge of quality control tend to intervene late in the rule-making cycle (Figure3.17). Quality control of RIA, for example, typically occurs after the preferred policy solution has been identified and a firstversion of the draft/proposed regulation or evaluation has been prepared. While it is understandable why some level of controlcan only take place late in the process, it is particularly striking that such a pattern should apply to advice and feedback.This raises the question of the effectiveness of these mechanisms. Hence ultimately the quality of RIA, stakeholder engagementand expost evaluation could be further enhanced if they were embedded more systematically at an earlier stage in the rulemaking process.
The effectiveness and impacts of regulatory oversight
About half of the bodies responsible for the quality control of regulatory management tools report to use some form of evaluationmechanism to monitor their activities, and results of evaluation efforts are frequently made public (Figure3.18). Half of all bodies responsible for quality control prepare reports on their effectiveness. About two thirds of these evaluationreports (from 16 different countries) contain performance indicators. A majority of bodies also track the number of reviewsor interventions they make annually. However, this performance information is tracked only internally in almost half of allcases.
Despite the existence of these mechanisms, there is very little evidence on the impacts of regulatory oversight on regulatoryimprovement and societal outcomes.
Figure 3.18. Reports on the effectiveness of regulatory oversight bodies responsible for quality control
Note: This figure is based on information available for 70 bodies reported in the survey responsible for quality control of regulatorymanagement tools.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Bodies that evaluate regulatory policy focus most frequently on the implementation of RIA (Figure3.19). While more than half of the bodies involved in evaluating regulatory policy report on the implementation or level of compliancewith formal requirements of RIA, less than a third of them report on compliance levels for stakeholder engagement or expost evaluation. Reports on the overall effectiveness of the framework for different regulatory management tools as a whole aremuch less common than reports on compliance with formal requirements.
Figure 3.19. Reports evaluating regulatory policy
Note: This figure is based on information available for 58 bodies out of 76 bodies reported in the survey that are responsiblefor the evaluation of regulatory policy.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
In many jurisdictions, evaluation efforts are not regular. Almost half of evaluation reports are prepared on an adhoc basis (Figure3.20). This is true for reports on compliance with formal requirements as well as reports on the effectiveness of the regulatorypolicy framework as a whole. The exceptions are reports on the implementation of RIA and administrative simplification programmes,which are conducted regularly in two out of three cases.
Figure 3.20. Frequency of evaluation reports
Note: This figure is based on information available for 58 bodies out of 76 bodies reported in the survey that are responsiblefor the evaluation of regulatory policy.
Source: Survey questions on regulatory oversight bodies, Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
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References
[4] OECD (2015), OECD Regulatory Policy Outlook 2015, OECD Publishing, Paris, https://doi.org/10.1787/9789264238770-en.
[1] OECD (2012), Recommendation of the Council on Regulatory Policy and Governance, OECD Publishing, Paris, https://doi.org/10.1787/9789264209022-en.
[3] OECD (Forthcoming), Case Studies of RegWatchEurope regulatory oversight bodies and of the European Union Regulatory Scrutiny Board, OECD, Paris.
[2] Renda,A. and R.Castro (Forthcoming), Defining and Contextualising Regulatory oversight and Co-ordination, OECD Publishing, Paris.
Notes
← 1. This function is also frequently referred to as gatekeeping function or challenging function.
← 2. Or an ex post evaluation from being finalised respectively.
← 3. These are the following bodies: Bodies reporting a sanctioning function that cannot be overturned for all three regulatory management tools include the Korean Regulatory Reform Committee, Poland’s RIA Department at the Chancellery of the Prime Minister and the US Office of Information and Regulatory Affairs. The Latvian State Chancellery reports a sanctioning function that cannot be overturned for RIA and stakeholder engagement, and the Mexican COFEMER for stakeholder engagement and expost evaluation. The Australian Office of Best Practice Regulation, Costa Rica’s Directorate for Better Regulation and the KoreanInstitute of Public Administration report such a function for RIA. The French Conseil d’État reports this function for stakeholder engagement, and the Italian Department of Legal and Legislative Affairs as well asthe Italian Court of Auditors for expost evaluation.
