The dreaded word ‘regulation’ brings to mind bureaucrats stifling growth and innovation by tying businessmen up in red tape. But that’s a distorted image. Rules and regs that are well designed and deftly overseen are essential to the smooth functioning of competitive markets. Like a football game without a good referee, a poorly regulated economy risks becoming a messy free-for-all.
A brave new world
Our latest newsletter looks at the challenges regulators face in adapting to fast-changing markets and technological innovations. Take data, dubbed the ‘new oil’ for its central role in today’s economy. Some worry that dominant firms could weaponise their control of valuable data to hurt rivals and, by extension, consumers. We ask whether a new regulatory framework is needed. Another pressing concern is how to prevent or mitigate myriad online harms that the explosion in user content can cause. We reckon economics can help improve regulation in this sensitive area. And we look at how Ireland’s energy regulator aims to facilitate the transition to net zero by giving regulated power companies more flexibility in their investment programmes.
It’s the outcome that counts
Other articles examine shifts in the guiding principles of UK regulatory policy. Protecting the consumer has always been a priority, but the FCA is raising the bar by consulting on a new Consumer Duty that would increase the standard of care expected of firms toward their clients. The proposal may turn out to be more evolutionary than revolutionary, but it reinforces the trend among regulators to focus on the outcomes that consumers experience in the real world rather than compliance by firms with inputs set out in thick rulebooks. In the same vein, we make the case that a radically new approach to outcomes-based environmental regulation in the water industry is needed to help meet the government’s long-term goals.
Team Thoughts
