Regulatory policy

Eighth meeting of the Network of Economic Regulators

 

24 April 2017, Paris, France

The Network saw again an increasing presence of senior and high-level officials from over 70 regulatory agencies who welcomed the release of the new guidance on Creating a Culture of Independence: Practical Guidance against Undue Influence, the culmination of in-depth work on the formal and practical aspects of independence. The guidance is ground-breaking in providing detailed structural recommendations to change the behaviour of institutions and its applicability to other areas, such as financial markets, corporate governance, competition agencies. The guidance adds to the long list of meaningful work  produced by the Network, further testimony of the good work of the Network and its members. 

The meeting offered a new opportunity to advance the agenda on the performance of regulators and their contribution to supporting markets’ and investors’ confidence for efficient and effective delivery, as well as measuring regulation and regulatory governance, the application of behavioural insights to consumer protection and new ways of engaging with stakeholders.

Key highlights from the meeting included:

 

Driving performance of Mexico’s energy regulators 

  • This is the second phase of a comprehensive look at the regulatory governance of Mexico’s energy sector, following the review of the external governance of the sector and focusing on the internal processes, tools and institutions driving performance at the National Agency for Safety, Energy and Environment (ASEA), the  National Hydrocarbons Commission (CNH) and the Energy Regulatory Commission (CRE).
  • This work is particularly relevant and timely as it follows the comprehensive structural reform programme launched in 2013 by the government of Mexico, which restructured the oil and gas industry and opened access to the country’s hydrocarbon resources to national and foreign public and private entities.
  • The first phase of the review already contributed to enhanced co-ordination and dialogue between ASEA, CNH and CRE, contributing to the creation of an integrated regulatory system of the energy sector.
  • Now is the time to put matters into place for the medium to long term in order to guarantee the success of the energy reform, including through greater institutionalisation of good governance practices.
  • Taken together, these reviews constitute a comprehensive body of work on the good regulatory governance of Mexico’s energy sector. They identify synergies, joint solutions and the building blocks of an ecosystem for the good regulatory governance of a key economic sector.

 

Measuring regulation and regulatory governance: a roundtable discussion 

  • The OECD is updating the next series of the OECD Product Market Regulation (PMR) indicators to be released in 2018. This flagship database includes also indicators of great interest for regulators, focusing on regulatory management practices, regulatory provisions for network sectors, and formal requirements for independence, accountability, and scope of action. 
  • The update will ensure a comprehensive review of the questionnaire to consider changes in the market structure and the emergence of complex issues related to digitalisation and rise of platform economies, as well as on independence, accountability, and scope of action by drawing on the work currently undertaken by the Network and other networks of regulators like CEER. 
  • The update is expected to emphasise the governance of regulators in infrastructure, such as in the case of ownership and operation of transmission systems in the energy sector. Equally important will be clarifying the roles between administrative regulators and economic regulators and reflecting the extent and purpose to which different instruments are used by regulators in the process. 
  • On the governance side, the stress will be on capturing and measuring the practical aspects of the independence of regulators.
  • The updated questionnaire is expected to be finalised in the second half of 2017, with data collection scheduled for end-2017 to mid-2018 and the release of the new indicators in early 2019. 

 

The New Regulation on the Protection of Users of Communication Services in Colombia 

  • The new consumer protection regulation was designed to overcome behavioural biases and benefitted from OECD and NER inputs and advice presented in the 2016 publication Protecting Consumers through Behavioural Insights: Regulating the Communications Market in Colombia.
  • The regulation is establishing a new regime designed to increase user satisfaction and establish effective complaint resolution mechanisms. 
  • New behaviourally-informed policies, legal framework and tools have been developed based on the OECD review. Thanks to the OECD recommendations, the new regulatory regime is expected to create a virtuous circle that provides users with appropriate information, which enables decision making in accordance with current and future users’ needs, creates active competition, and, finally, improves quality, prices and offers.
  • Consumer protection is clearly emerging as tool to empower consumers while also ensuring competition and better service quality not only in communication but also in other markets and sectors. Some of these issues were also discussed at a series of OECD Conferences on behavioural insights held in Paris on 11-12 May 2017.

 

Stakeholder Engagement Best Practice Principles

  • The OECD is currently developing Best Practice Principles on Stakeholder Engagement to unbundle the 2012 OECD Recommendation on Regulatory Policy and Governance and provide governments and regulatory agencies with a more practical and concrete instrument to support stakeholder engagement.
  • The underlying premise of the Principles is that despite flexibility in using various approaches to stakeholder engagement, there should always be an opportunity for all stakeholders to provide their opinions through a predictable mechanism.
  • A discussion point is whether stakeholder engagement can move towards co-construction of regulation with stakeholders, towards collaboration rather than consultation. While this aspect is not expected to be addressed in the Principles, regulators do have opportunities for greater collaboration and engagement through the use of data (open data, big data, but not only) and experimentation around behavioural barriers.
  • Engagement can also be incentivised through the systematic publication of all submissions. In some contexts, stakeholders cannot make comments unless these are made public. Confidentiality of data may apply to economic regulators and in some cases restrict the publication of comments, but in any case, maximum transparency should be sought.
  • Data can also be made public on an aggregate level which would minimise the risk of publishing any sensitive information.

 

For more information, please contact Faisal Naru.

 

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