Cutting Red Tape by Making Consumer Regulation More Effective

1. Cutting Red Tape by Making Consumer Regulation More Effective Carolyn Bond Co-CEO

2. Red Tape • “Red Tape” – unnecessary paperwork/regulation • Reduce “red tape” by making regulation more effective

3. What is Effective Regulation? For the purposes of this presentation, I have assumed that effective regulation: • Prevents, or reduces, practices that are causing harm to consumers; and • Enables the individual consumer to seek redress

4. Choosing the Right Tools • Legislation • Codes – Voluntary and various forms of enforceable codes • Licensing • Criminal Penalties • Civil Penalties • Innovative approaches such as Unfair Contract Terms • Dispute options – courts, tribunals, industry ADR

5. Choice of tools depends on range of factors • Type of industry (size, culture etc) • Regulator (powers, resources, priorities) • Availability of consumer advice/legal services • Cause of the problem (industry structure, historical unfair practices, lack of clarity of laws ) • Consumer factors (are these consumers particularly disadvantaged? – ie fringe borrowers)

6. Getting the structure right Identify the weak links in the regulatory structure: • Penalties (or risk of being caught) not great enough to discourage conduct; • Regulator not taking action; • Complaints/disputes process not accessible; • Complaints/disputes are not being used to identify and address systemic problems; • Regulation is not enforceable; • Industry is actively avoiding the regulation (ie finding loop-holes).

7. Discussion • Identify one example of consumer regulation that you believe is particularly effective or ineffective. • Identify the factors that impact on the effectiveness of this regulation.