Can business be trusted to regulate itself?

For years now, UK retailers have been involved in a diverse range of voluntary schemes which aim to deliver clear benefits for consumers and society more broadly. Some examples you may be familiar with include:

  • The Public Health Responsibility Deal set up to address concerns around healthy eating and obesity
  • The Proof of Age Standards Scheme to prevent underage purchases of tobacco
  • Drinkaware, a scheme to raise awareness of alcohol-related issues.

For industry, Government and the consumer, these voluntary self-regulation schemes deliver positive benefits. For British businesses, adopting a voluntary scheme often means avoiding potentially harsher alternatives, such as mandatory regulation imposed by government at either national or local level.

But voluntary schemes can also enhance the reputation of a business, allowing it to build trust with its customers over the long-term. Voluntary schemes can also help change the public perception of an industry away from one which cares only about profit margins and growth towards one which takes a genuine interest in addressing people’s concerns around issues like public health, product safety and the environment.

There is a need for an overall framework to measure how effective schemes are at tackling the issue or problem.

Last year, the British Retail Consortium (BRC) commissioned an independent report to examine the use of government-sponsored voluntary regulation.

Our aim was to compare the benefits of voluntary regulatory initiatives with mandatory (or statutory) regulation. The report showed that while voluntary schemes have proliferated across the retail industry in recent years, there is a need for an overall framework to measure how effective they are at tackling the issue or problem.

Our Framework for Voluntary Regulation followed the report with six key principles which we believe as an industry ought to be followed both by business and government before going down the voluntary self-regulation route. Our Framework, it is important to stress, aims to support the development of better quality voluntary regulation not to prevent its use.

The six principles are:

  • There should be an evidence-based problem or social policy objective to be met
  • The desired outcome should be clear – i.e. will voluntary regulation alone solve the problem at hand?
  • The scheme should be practical, proportionate and targeted and it should be flexible enough to allow for implementation in different ways appropriate to each business involved
  • There should be a robust impact assessment at the outset
  • A mechanism for periodic review of the costs, impacts and outcomes should be put in place
  • There must be full application of better regulation principles, together with a pledge from government for no new legislation to be introduced in addition to the voluntary scheme.

In conclusion, voluntary self-regulation schemes which have been used for many years now, have been proven to work and deliver benefits for both business and consumers alike. Any such scheme however – whether mandatory, government sponsored or purely voluntary — should be based upon a set of practical guiding principles so that it continues to work for, and is trusted by, business, government and ultimately the consumer.

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