Regulatory policy

Creating a Culture of Independence

Practical Guidance against Undue Influence

In series:The Governance of Regulatorsview more titles

Published on April 26, 2017

Also available in: Spanish, French

Regulators are the “referees” of markets that provide essential services to citizens; they guarantee that all actors respect the rules and work to achieve the best outcomes. This means that their behaviour must be objective, impartial, consistent and free from conflict of interest – in other words, independent. Yet, regulators need to engage with a number of stakeholders, who may also seek to apply pressure and exert undue influence on regulatory outcomes. The independence of regulators is thus constantly under stress. This report provides practical advice on how to address stress points and protect economic regulators from undue influence, drawing on the experience of over 80 regulators that participate in the OECD Network of Economic Regulators (NER). It presents a practical checklist to support behavioural and organisational change, and helps other stakeholders better understand and appreciate the role of regulators and how to interact with them.


Foreword and acknowledgements
Executive summary
Users' guide
Rationale: When and why is independence necessary and why is this guidance needed
Guidance on creating a culture of independence
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The guidance proposes some basic and necessary institutional measures as well as more aspirational steps that regulatory agencies can take towards bolstering a culture of independence. The guidance covers issues linked to both external and internal governance of regulatory agencies, structured according to the following five dimensions:

  • Role clarity and responsibility: legislation should clearly describe the regulator’s objectives and relation with other government actors. Regulators should also be proactive in reaching out to other government actors, using their strategic foresight capacity and educating stakeholders on their role.
  • Transparency and accountability: regulators should provide timely and relevant information on performance. There should be appropriate channels for complaints and appeals against their decisions. Regulators may aspire to implementing ethics code and transparency and integrity principles.
  • Financial independence: there should be clear, established, consistent and transparent processes for determining funding needs and how funds are decided. Regulators should have appropriate and accountable autonomy in spending their budget.
  • Independence of leadership: nomination and appointment of the regulator’s leadership should be based on transparent and accountable processes. Clear conflict of interest rules should be in place to support independent behaviour while in employment and upon exiting.
  • Staff behaviour: recruitment should be based on competence and ethics. Staff should have incentives and freedom of action to carry out their duties. Regulators may aspire to be autonomous in setting salaries and implement proportionate pre- and post-employment restrictions.