The Law Reform Commission (LRC) certainly thinks so. Its recommendation for such an Office appears in a report, of over 800 pages, published in October 2018. The report entitled Report on Regulatory Powers and Corporate Offences is published two volumes; Volume 1 and Volume 2.
To date, there has been no published response from Government regarding this recommendation.
Law Reform Commission’s Report
The Law Reform Commission is an independent statutory body whose main role is to keep the law under review and to make proposals for reform. In its recent report the Commission focuses on regulatory powers and corporate offences and makes over 200 recommendations for further reform on regulatory powers and corporate offences, including:
- A statutory Corporate Crime Agency and a dedicated unit in the Office of the Director of Public Prosecutions should be established, and properly resourced.
- Economic regulators should have the power to impose significant financial sanctions and to make regulatory enforcement agreements, which should include consumer redress schemes.
- The recommendations on regulatory powers would apply not only to regulation of financial services but also to the wider economic context, such as in competition law, communications regulation and health products regulation.
- The recommendations on corporate offences would clarify the circumstances in which a corporate body could be held criminally liable for systemic failures by its senior executives.
- The Report recommends that, in order to address egregiously reckless risk-taking, our existing fraud offences should be amended so that conscious (subjective) recklessness by a person would amount to fraud under, for example, the offence of false accounting in the Criminal Justice (Theft and Fraud Offences) Act 2001.
Case for reform on Regulatory Powers and Corporate Offences
In November 2017, the Government published its suite of measures aimed at enhancing corporate governance, increasing transparency and strengthening Ireland’s response to White Collar Crime. The report is entitled Measures to Enhance Ireland’s Corporate Economic and regulatory Framework (Ireland combatting “White Collar Crime”) https://dbei.gov.ie/en/News-And-Events/Department-News/2017/November/02112017.html
The measures announced by the Government are grouped under four main themes designed to augment the existing regulatory and legislative framework in Ireland in the area of corporate, economic and regulatory crime:
- Organisational and procedural reform;
- Corporate governance;
- Enhancing the powers of the authorities to identify and combat economic and regulatory offences in the financial sector, and
- Countering Money Laundering and Corruption.
Specifically, the report set-out 28 actions which are time-bound and assigned to lead Departments for implementation. They are summarised below.
Government’s Main Actions, announced 2 November 2017, to augment the existing regulatory and legislative framework in Ireland, include:
- a) Establishing the Office of the Director of Corporate Enforcement as an independent company law enforcement agency, to provide greater autonomy to the agency;
- b) Establishing a Joint Agency Task Force on a pilot basis to tackle criminality in a specific area. The merits of the Joint Agency Task Force approach will be assessed as part of a wider review of the effectiveness of state bodies engagement on fraud and corruption;
- c) Enacting the Criminal Justice (Corruption Offences) Bill which involves a major consolidation of anti-corruption legislation, introduces new offences and includes legislative provision for recommendations arising from the Mahon Tribunal;
- d) Publishing and enacting the Criminal Procedure Bill, which will, inter alia, streamline criminal procedures to enhance the efficiency of criminal trials;
- e) Implementing the Markets in Financial Instruments Directive II (MiFID II) to improve the functioning of financial markets, making them more efficient, resilient and transparent and to strengthen investor protection;
- f) Evaluating the Protected Disclosures Act, which can relate to any aspect of the operation of the Act but seeks to inform in particular, whether the legislation has been effective in line with its objectives; and how it might be improved;
- g) Ensuring this package of measures will be subject to regular scrutiny by the Oireachtas to monitor the implementation of the measures and ensure the regulatory environment is enhanced, while also increasing the prevention, identification, investigation and prosecution of corporate, economic and regulatory offences. This, in turn, will enhance Ireland’s competitiveness and attractiveness as a place to do business.
In turn, the Law Reform Commission made its case in 2018 for reforming regulatory powers and corporate offences in Ireland. One has only got to refer to the banking and financial crisis of 2008 which highlighted the need for certain fundamental legal reforms. In particular, that crisis pointed to the importance of ensuring that financial and economic regulators have at their disposal sufficiently robust and comprehensive powers to discharge their functions effectively. The crisis also illustrated the need to ensure that laws governing corporate criminal liability should reflect the reality of modern-day corporate decision-making.
What about a Regulatory Guidance Office?
In making its case for a Regulatory Guidance Office, the LRC is very careful in stating that it is not cutting-across the Government’s role in policy making. Specifically, it states that it – “… does not seek to prescribe a particular type of regulatory policy or approach to financial or economic regulation. This is a policy matter that falls outside the Commission’s capacity”. With these caveats in mind, the Commission did make its recommendation about a Regulatory Guidance Office, having considered relevant OECD advice, and having considered views expressed in submissions received. Specifically, it took into account one of the twelve recommendations published in 2012 by the OECD, namely:
“Commit at the highest political level to an explicit whole-of-government policy for regulatory quality. The policy should have clear objectives and frameworks for implementation to ensure that, if regulation is used, the economic, social and environmental benefits justify the costs, the distributional effects are considered and the net benefits are maximised”. https://www.oecd.org/governance/regulatory-policy/49990817.pdf
The Commission also drew attention to Report 124 published in 2011 by the National Economic and Social Council (NESC) which noted that the OECD had, in 2010, commended the positive contribution made to regulatory policy in Ireland by the Better Regulation Unit (BRU), which had been located within the Department of the Taoiseach. https://www.nesc.ie/publications/124/
Specifically, the Commission noted that:
“The BRU’s functions reflected many of those referred to in the OECD’s 2012 Recommendation on Regulatory Policy and Governance such as, for example, the approach to the deployment and format of pre-legislative Regulatory Impact Analysis (RIA). In 2011, many of the functions of the BRU were absorbed into the Department of Business, Enterprise and Innovation, although it is also the case that since 2011 the BRU no longer has a distinct existence as such. As a result, it would appear that the whole-of government approach identified in the OECD’s 2012 Recommendation, and which had clearly been within the remit of the BRU, does not currently have an identifiable focal point”. https://www.lawreform.ie/_fileupload/Completed%20Projects/LRC%20119-2018%20Regulatory%20Powers%20and%20Corporate%20Offences%20Volume%201.pdf
In the light of the foregoing, the LRC produced a very practical recommendation that has an overarching dimension as well as functions similar to those that had been exercised by the Better Regulation Unit (BRU), which had been located within the Department of the Taoiseach, up to mid-2011. And so, the Commission’s recommendation for a new Regulatory Guidance Office is as follows:
“The Report recommends that a Regulatory Guidance Office should be established, with membership drawn from Government Departments and Regulators, to provide guidance and information on regulatory matters, including national and international best practice in economic regulation, the content of Regulatory Impact Assessments (or comparable documents) and lessons learned from the relevant case law. The functions of the Regulatory Guidance Office would be broadly comparable to the former Better Regulation Unit (BRU) in the Office of the Taoiseach”.
To date, there has been no published response from Government regarding this particular recommendation.
Tom Ferris is a Consultant Economist specialising in Better Regulation. He lectures on a number of PAI courses and contributes blogs regularly to PAI. He was formerly the Senior Economist at the Department of Transport.