Regulation nearing tipping as govt watchdogs flex muscles
Tuesday 04 April 2017 07:40 AM
Regulation nearing tipping as govt watchdogs flex muscles, Chapman Tripp says
By Paul McBeth
April 4 (BusinessDesk) - The expansion of regulatory regimes and increased budgets to enforce them may have pushed the balance of government oversight to a "tipping point" where the costs start outweighing the wider public benefits, Chapman Tripp says.
The law firm expects more proactive regulatory intervention by agencies including the Commerce Commission, Financial Markets Authority, Serious Fraud Office, Inland Revenue, and Overseas Investment Office, which have all received bumps in funding to pay for increased demands by the government to keep tabs on the market. In a trends and insights paper on dispute resolution in New Zealand, Chapman Tripp noted "increasingly proactive regulatory intervention" in 2016 was likely to continue this year.
Partner Victoria Heine told BusinessDesk there have been "some very prescriptive regimes" introduced in recent years. She expects policymakers will keep pursuing more regulation in the near term, which will ultimately lead to that regulatory burden being passed on to consumers.
"They've been given the legislation by Parliament for a reason - they've now been given the money to enforce that legislation so it's not surprising that they want to get on with it," Heine said. "We're at a tipping point and there must be a point at which regulation goes beyond what's necessary to protect markets and protect consumers and create a cost in and of itself. I think the next two-to-three years are quite critical."
The National Party-led administration has opposed increased regulation since election in 2008 and, in 2013, tasked the Productivity Commission with recommending how best to improve the design of new regulatory regimes and improve the existing frameworks. However, that's occurred at a time when there's been a worldwide push to boost regulation after the 2008 financial crisis highlighted holes in the oversight of global financial systems, demanding greater international coordination. The shift towards digital services has also created new demand for regulatory responses.
Heine said she will be watching for consistency and transparency in regulatory decision-making and wants regulators to weigh up the commercial context of their rulings rather than just pursuing technical breaches.
Reform of the country's courts including efforts to strip back the volume of paper and lift the civil jurisdiction of the District Court had gone some way to making it easier to find court time, but Heine said it was still a real issue not just in New Zealand, but in most first-world countries.
"Going to court has become so expensive that only very well-resourced litigants can do it," she said. "A very high percentage of litigants are self-represented. That puts a huge burden onto our court system."
Heine wants to see reforms in class suits, which the government has left untouched for many years, meaning representative actions were covered by court rules; and greater rigour over litigation funding firms, which she says may not share the interests of those making a claim.
"It's not a high priority, but from a practitioner's point of view I'd like to see that progressed, so we can have a sensible set of rules rather than one the courts have had to create themselves," Heine said.