Summary of recommendations
Chapter One
1. I recommend that the Government initiate a review of the drafting and formulation of criminal offences relating to regulatory non-compliance.
Chapter Two
2. I recommend that in designing the appropriate sanctioning regimes for regulatory non compliance, regulators should have regard to the following six Penalties Principles and seven characteristics.
Chapter six
Six Penalties Principles
A sanction should:
- Aim to change the behaviour of the offender
- Aim to eliminate any financial gain or benefit from a non-compliance
- Be responsive and consider what is appropriate for the particular offender and regulatory issue, which can include punishment and the public stigma that should be associated with a criminal conviction
- Be proportionate to the nature of the offence and the harm caused
- Aim to restore the harm caused by regulatory non-compliance, where appropriate
- Aim to deter future non-compliance
Seven characteristics
Regulators should:
- Publish an enforcement policy
- Measure outcomes not just outputs
- Justify their choice of enforcement actions year on year to stakeholders, Ministers and Parliament
- Follow-up enforcement actions where appropriate.
- Enforce in a transparent manner
- Be transparent in the way in which they apply and determine administrative penalties
- Avoid perverse incentives that might influence the choice of sanctioning response
Chapter Three
3. I recommend that in order to increase the effectiveness of criminal courts for regulatory offences, the following actions should be implemented:
- The Government should request the Sentencing Guidelines Council prepare general sentencing guidelines for cases of regulatory non-compliance.
- Prosecutors should always make clear to the court any financial benefits resulting from non-compliance as well as the policy significance of the relevant regulatory requirement.
- Prosecutions in particular regulatory fields be heard in designated Magistrates' Courts within jurisdictional areas, where appropriate.
- Regulators provide specialist training for prosecutors and discuss with the Judicial Studies Board (JSB) contributing to the training of the judiciary and justices' clerks.
4. I recommend that with regards to Monetary Administrative Penalties:
- Government should, consider introducing schemes for Fixed and Variable Monetary.
- Administrative Penalties, for regulators and enforcers of regulations, that are compliant with the Hampton and Macrory Principles and characteristics. This can include national regulators as well as local regulatory partners.
- Appeals concerning the imposition of an administrative penalty be heard by a Regulatory Tribunal, rather than the criminal courts.
- Fine maxima for Fixed Monetary Administrative Penalties (FMAP) schemes should be set out and not exceed level five on the standard scale. FMAPs should also be scaled to differentiate between small and large firms.
- There should be no fine maxima for Variable Monetary Administrative Penalties (VMAPs).
Chapter Four
5. I recommend that for an improved system of Statutory Notices:
- Government should consider using Statutory Notices as part of an expanded sanctioning toolkit to secure future compliance beyond the areas in which they are currently in use.
- Regulators should follow-up Statutory Notices using a risk based approach including an element of randomised follow-up.
- In dealing with the offence of failing to comply with a Statutory Notice, regulators should have access to administrative financial penalties as an alternative to criminal prosecution. This power should be extended by legislative amendment to existing schemes of Statutory Notices.
- Government should consider whether appeals against Statutory Notices should be routed through the Regulatory Tribunal rather than the criminal courts.
6. I recommend that the Government should consider introducing Enforceable Undertakings and Undertakings Plus (a combination of an Enforceable Undertaking with an administrative financial penalty) as an alternative to a criminal prosecution or the imposition of VMAPs for regulators that are compliant with the Hampton and Macrory Principles and characteristics.
7. I recommend that Government introduce pilot schemes involving the use of Restorative Justice Techniques in addressing cases of regulatory non-compliance. This might include RJ:
- as a pre-court diversion;
- instead of a Monetary Administrative Penalty;
- within the criminal justice system - as both a pre or post sentencing option.
8. I recommend that the Government consider introducing the following alternative sentencing in criminal courts:
- Profit Order - Where the profits made from regulatory non-compliance are clear, the criminal courts have access to Profit Orders, requiring the payment of such profits, distinct from any fine that the court may impose.
- Corporate Rehabilitation Order - In sentencing a business for regulatory non-compliance, criminal courts have on application by the prosecutor, access to a Corporate Rehabilitation Order (CRO) in addition to or in place of any fine that may be imposed.
- Publicity Order - In sentencing a business for regulatory non-compliance, criminal courts have the power to impose a Publicity Order, in addition to or in place of any other sentence.
Chapter Five
9. I recommend that to ensure improved transparency and accountability:
- The Better Regulation Executive should facilitate a working group of regulators and sponsoring departments to share best practice in enforcement approaches, the application of sanction options, development of outcome measures and transparency in reporting.
- Regulators and sponsoring departments should work with the Executive to include outcome measures as part of their overall framework of performance management.
- Publish Enforcement Activities - Each regulator should publish a list on a regular basis of its completed enforcement actions and against whom such actions have been taken.
