This time last week I chaired a live webinar discussion on the impact on organisations of increasing complexity in the regulatory environment, between Vicky Marissen, Managing Director of PACT European Affairs, and Daniel Greenberg, Counsel for Domestic Legislation in the House of Commons.
For those unable to join us live, a recording of the webinar, with accompanying slide presentation, can be found here. I’ve summarised some of the key takeaways in this blog.
The inspiration for the webinar came from a major Law Society survey in May 2016, which identified complexity as a key challenge for the in-house community. I picked out one particular comment from a FTSE 350 in-house counsel who was interviewed, describing how their team was swept along on an “almost constant flow of new legislation and regulations”, and asked Daniel and Vicky what they saw driving the increase in complexity.
What is driving complexity?
Daniel drew attention to both the appetite for regulating in great detail across broad areas, which itself was driving an unprecedented volume of quasi-legislation, such as codes, guidance and directions. He said:
“Before the year 2000 there were only a handful of these but from 2000 onwards there is an explosion in quasi-legislation. Almost every Act of any size gives around 100 powers to make quasi-legislation, to sit alongside primary and subordinate legislation.”
Vicky noted that a similar trend towards framework legislation filled out by quasi-legislation was evident in Europe, and also drew attention to the EU’s drive to harmonise alongside the need to tackle areas of great technological change, such as financial services. We looked at deregulatory initiatives and the ‘better regulation’ agenda, but concluded that, ironically, both tended to create more, rather than less, regulation.
What challenges does complexity bring?
We identified three key challenges arising out of complexity:
• Compliance: it is harder to comply with obligations if they are complex. This is particularly challenging when we are asked to comply not just with the letter of the law but to interpret the purpose of the legislation to properly comply.
• Horizon scanning: For satisfactory compliance and business planning, as well as commercial decision-making, you need to be able to see what the regulatory environment is going to be in the future and that is harder when the environment is complex.
• Effective influencing: It is harder to influence complex legislation, because influence needs to be anticipatory and take place at all levels in the law-making process, from the minister to the civil servant who will draft the guidance and the technical select committees who will work on it.
How can I avoid wasting paper on consultations?
We discussed a number of strategies for targeting lobbying efforts appropriately, the key being to ensure that everything we try to influence speaks directly to our organisation’s commercial priorities. Daniel reminded us that there is no legal duty to respond to consultations, but we must ensure that we mobilise the whole efforts of our organization around those areas we do seek to influence, giving the right technical input to ensure an effective engagement.
Vicky noted that the lobbying function in the EU was accepted as worthwhile but also highly competitive, and that everything has to be extremely “well fitted” to both the organization and the target. She also reminded us of the need to review efforts in the light of the outcome of the EU Referendum and consider whether what we were doing was still going to be effective as the UK’s influence waned:
“Most effective lobbying in Europe was always done on this broad basis, rather than on national grounds, so the chances are the approach needs very little change if it has been effective up until now.”