Licensing and Permitting

Principle 6: Ensure fairness and integrity in L&P

 

Principle definition
Licensing authorities should ensure their processes are fair, ethical and transparent and are supported by independent accountability mechanisms.
Sub-principles	Criteria
6.1 Keep processes clear and transparent	Provide transparent information on L&P processes and decision-making
6.2 Implement checks and balances to avoid abuse	Set high integrity standards for public officials involved in L&P Implement effective integrity mechanisms and tools in L&P Tailor integrity mechanisms and tools to the local context and specific L&P sector
6.3 Establish independent and accessible appeals and complaint mechanisms	Ensure independent, accessible, timely and transparent appeals and challenges Adopt accessible and simple complaints mechanisms against improper behaviour

Preserving the integrity of L&P authorities and processes means applying ethical values, principles and rules to ensure accountability and transparency. Misuse of L&P, such as leveraging it to generate revenue over legitimate regulatory purposes or even to extract bribes, contradicts the aims of L&P, erodes public trust and weakens governance. Ensuring integrity in L&P fosters trust among L&P applicants and citizens generally, while mitigating the potential risks of corruption.

To that end, L&P authorities should secure objective and fair processes and decision-making, implement integrity measures and tools, adopt independent appeals and clear complaints mechanisms.

6.1. Keep processes clear and transparent

Provide transparent information on L&P processes and decision-making. Transparency is required on the “what, how, why and when” behind L&P processes and decision-making. This should include information on the procedural steps taken, the authorities involved, how decision-making criteria were developed and applied, and the legal basis for decisions. It also includes transparency on timelines and notification means. Information should also cover any other considerations assessed by L&P authorities, particularly in the case of competitive processes. The information should be made publicly available in line with data protection requirements. Reports could cover approval rates, processing times, justifications for denials, backlog statistics, and key compliance and enforcement activities. The information should be provided in plain language that is easily understood by the public. Clear and transparent processes allow stakeholders to know what they can expect from the L&P process. Incorporating multi-stakeholder consultation in licensing decisions enhances transparency, accountability, and the quality of decision-making by considering diverse perspectives, including those of businesses, regulators, and affected communities.

6.2. Implement checks and balances to avoid abuse

Set high integrity standards for public officials involved in L&P. L&P are still unfortunately fertile ground for excessive discretion, abuse of power or corruption. Fair, objective and proportionate processes help mitigate concern around arbitrary decisions and enhances accountability. This contributes to a better environment for growth by supporting trust and certainty in citizens, regulated subjects and investors. To foster a culture of integrity and trust, standards based on ethical values should be included in the relevant frameworks or codes of conduct. This can help to mitigate conflicts of interest and the risk of corruption, such as abuse of office, fraud or bribery. Including standards in the legal frameworks and in internal policies (i.e. codes of conduct) can contribute “to clarify expectations and serve as a basis for disciplinary, administrative, civil and/or criminal investigation and sanctions, as appropriate” (OECD, 2017[23])

Implement effective integrity mechanisms and tools in L&P. Most public institutions and regulators implementing L&P processes may already have in place integrity mechanisms and tools. Indeed, 70% of OECD countries have guidelines on fraud and corruption prevention as part of their internal control systems (OECD, 2024[24]). Providing guidance on what to do when aware of a possible conflict of interest or act of corruption can serve as an important preventive measure. In addition to such guidelines, L&P authorities should create an integrity culture using a mix of constructive methods (e.g. leadership support, training), incentivisation (e.g. rewards or KPI integrity measures), and deterrence mechanisms (e.g. investigation and sanctioning). A public integrity framework can promote ethical standards in lobbying and influence activities, in line with the OECD Recommendation on Transparency and Integrity in Lobbying and Influence [OECD/LEGAL/0379]. At the same time, it is essential to safeguard those who scrutinise or report violations of lobbying and influence regulations by protecting their right to freedom of expression and access to information. Improving working conditions and salaries for L&P officials is another proactive measure. International experience shows that integrity policies that are overly focused on sanctions and punishment may result in "defensive bureaucracy”. This can undermine the implementation of a risk-based, responsive and proportionate approach to L&P. It can also damage trust in the system by L&P applicants and other stakeholders (Lambsdorff, 2012[25]).

Tailor integrity mechanisms and tools to the local context and specific L&P sector. Certain L&P sectors have a greater risk of corruption due to the nature of the interactions between authorities and the potential recipients. The scale and complexity of the project itself (e.g. projects related to energy, infrastructure or extractive industries) can also be a factor. To promote integrity and mitigate corruption, L&P authorities need to identify at what stage and in which circumstances risks may arise. Understanding this will allow regulators to focus efforts on high-risk areas and implement the appropriate actions and tools.

6.3. Establish independent and accessible appeals and complaint mechanisms

Ensure independent, accessible, timely and transparent appeals and challenges. The ability to appeal or challenge a decision is vital to securing integrity and fairness in L&P. Appeal mechanisms can vary among different L&P authorities, but they need to be independent, accessible, timely and transparent. Based on clearly defined conditions, they should also allow L&P applicants to challenge decisions, related processes and measures, including sanctions. For example, an applicant may disagree with measures imposed to grant a license). The ability to challenge a L&P decision should also be made available to other interested parties (e.g. where a civil society organisation wishes to challenge a decision granting a mining license on the grounds of environmental damage caused).

Adopt accessible and simple complaints mechanisms against improper behaviour. L&P subjects or applicants should be able to file complaints against the behaviour of officials involved in L&P – for example, when they are performing on-site checks at a facility. This will build the confidence of applicants and help L&P authorities assess the behaviour of their officials and, most importantly, the success of their own internal integrity mechanisms and tools. Accessible and simple mechanisms should also exist for citizens and stakeholders to file complaints against the behaviour or activities of L&P applicants or holders. Complaints should be assessed against a set of criteria comprising the quality of the evidence provided and the risk created by the alleged non-compliant behaviour. Based on this analysis, the relevant authorities will be able to arrive at an adequate response including, where justified, the redress and sanctions that are proportionate to the risk being created (OECD, 2018[3]). By no means should complaints automatically (i.e. without prior analysis) trigger an inspection. Sanctions should only be used as a last resort. Information and data gathered from complaints should feed the intelligence system of the relevant authorities and support risk assessment. At the same time, it must be ensured that whistle-blowers and all those who scrutinise and report violations are protected from intimidation and threads.

Good governance (as defined in (World Bank, 1994[26]) & (OECD, 2020[27])) can help ensure that L&P systems are robust and capable of adapting to changes in industry and the regulatory landscape. This entails implementing effective performance assessment and resourcing mechanisms. Through diligent performance assessment, L&P authorities can prevent redundancies and bureaucratic obstacles, ensuring that regulations deliver on their intended objectives while reducing burdens that hinder economic growth. The continuous evaluation and refinement of L&P criteria and processes, ensures that they remain relevant, efficient and responsive to changes and emerging needs. Adequate resourcing ensures that L&P authorities have the necessary capacities, personnel, tools and technology to carry out their activities effectively and efficiently. This includes managing applications, enforcing compliance and supporting regulated subjects.

Fostering a culture of continuous improvement and accountability enhances the credibility and reliability of the L&P system. It supports innovation and economic growth while reducing risks. It also builds trust among stakeholders and the public who can be confident that the system is designed and managed to uphold high standards of safety, quality, and fairness.