Regulatory Posture: describing it, developing it, and demonstrating it

This guest editorial for the ANZSOG-auspiced National Regulators Community of Practice (NRCoP) has been written by Dr Grant Pink, Pracademic Advisor to the NRCoP and Adam Beaumont, NRCoP National Committee member.

Introduction

In our roles as regulatory advisors, educators, and academics, ‘regulatory posture’ is a topic that frequently presents during discussions. Despite the increasing frequency and intensity of these discussions ‘regulatory posture’ continues to prove to be a difficult concept for regulators to describe, develop, and demonstrate.

Regulatory posture – describing it

What is regulatory posture?

Most simply ‘regulatory posture is the approach or stance that a regulator adopts towards those it regulates’.[i] A regulatory posture requires a regulator to balance a range of primary, secondary, and tertiary tensions.[ii]

A regulator’s posture may have fixed, firm, and flexible elements. However, it is important to recognise that the general approach or perceived response applied by the regulator can be seen as projecting a defined or default regulatory posture. For example, the perception (or reality) is that the regulator:

• always defaults to education; or
• will always take enforcement action.

Regulatory posture – developing it

Why deliberately develop a regulatory posture?

If regulators do not intentionally develop a regulatory posture it is likely they will be attributed with or ascribed with one. Noting that the ones given to them by regulated entities, stakeholders, the wider community, and even in some instances by co- and peer- regulators, are almost always negatively framed.

For example, regulators may be described as:

• a toothless tiger – suggesting they have no real power or authority, or they may have powers but are unwilling to use them.
• acting like jackbooted enforcers – implying they are overly heavy-handed, not proportionate, or are wanting to be seen as taking action (regardless of the perceived or justifiable need).
• behaving like a windsock/pendulum – indicating they are unsure, overly reactive, or are acting in response to a past significant failure or event (as opposed to what’s in front of them).
• being a puppet – of a third party, i.e. government, industry, or interest group.

From Lap Dog to Watch Dog

A regulator shared that a regulated entity had recently described them as now acting more like a ‘Watch Dog’, having previously been perceived very much as a ‘Lap Dog’.

Continuing with the dog analogy, and in a linear fashion, when asked to consider what the next iteration could be described as. Their response was ‘Guard Dog’.

From Guard Dog to Attack Dog

Panellists at a regulatory conference were specifically discussing communicating enforcement actions or prosecution outcomes, as a sub-set of regulatory communications.

Once again, continuing with the dog analogy, and still in a linear fashion, panellists were asked to consider what the next iteration could be described as. Their response was ‘Attack Dog’.[iii]

Regulatory posture – demonstrating it

Where can regulatory posture be demonstrated?

For maximum impact, a regulatory posture should be actively and positively projected and explained. It should therefore be demonstrably evident, both directly and indirectly, in:

• documents – such as regulatory strategy, regulatory priorities, and regulatory policies;
• demeanour – of agency staff in terms of their regulatory identity, regulatory culture, and regulatory professionalism; and
• deliverables – such as achievement of regulatory outcomes, and maintenance of regulatory relationships.

Continually demonstrating an agency’s regulatory posture across, and beyond, the aspects outlined above has a mutually reinforcing/force multiplier effect.

Multiple postures

How many regulatory postures is enough?

The less than helpful but accurate answer to this question is: enough, but no more than is necessary!

If a regulator attempts to arbitrarily apply a single regulatory posture across the depth and breadth of its regulatory activities and regulatory systems:

• it is the equivalent of trying to fit a square peg in a round hole or trying to eat every meal with a spoon; and
• it is highly likely that there will be unintended consequences, and the regulator will receive significant push back when other pressures are at play (think COVID, Global Financial Crises, major natural disasters, thin market dynamics in regional areas).

Equally, it is not possible nor appropriate for a regulator to develop highly (industry, sector, or regulated entity specific) individualised or customised regulatory postures. To do so moves us into discussions around Regulatory Statements of Expectation and Regulatory Statements of Intent.

If a regulator is projecting too many different types of regulatory postures across the depth and breadth of its regulatory activities and regulatory systems:

• it is the equivalent of trying to be everything to everyone and nothing to all of them simultaneously. This issue is compounded where regulatory culture is immature or fragile, and this can create different types of challenges around how the regulator applies regulatory discretion, makes choices, and regulatory decisions; and
• as above, it is highly likely that there will be unintended consequences, and the regulator will once again receive significant push back.

The need for sub-postures

A regulator might benefit from developing a general regulatory posture. That is one that generally reflects its posture and stance, across its various regulatory activities and regulatory systems.

Equally, it could be appropriate for a regulator to develop several sub-postures. These postures would sit beneath the general regulatory posture, and would enable the regulator to consider the primary, secondary, and tertiary tensions alluded to in the definition above.

This may be especially useful for those regulators that:

• have responsibility for administering multiple regulatory systems;
• are operating across different regulatory domains;[iv]
• engage with different regulated sectors and industries;
• are regulating in new, emerging or rapidly changing sectors; or
• involve different regulated commodities.

The consequences around regulatory posture (i.e. of either not having a regulatory posture or not having clearly defined sub-postures) compounds for those regulators that have regulated entities actively operating under multiple regulatory systems, and who may also be operating across different jurisdictions.

Let’s meet the entire pack

Thus far this article has referred to Lap Dog, Watch Dog, Guard Dog, and Attack Dog. There is another dog that we believe has a place in the pack, and that is a Support Dog. In a linear sense it would typically sit between Lap Dog and Watch Dog or occasionally sit between Watch Dog and Guard Dog.

There are justifiable concerns that can come with the concept of a Support Dog. A common concern is that ‘advice and guidance’ can quickly become a slippery slope for an issue like regulatory capture. This is because by giving (specific) advice on what compliance could look like means the regulator assumes responsibility for the regulated entity’s obligation.

However, that is not to say that a corresponding regulatory posture that involves some element of a Support Dog should not be used in appropriate contexts. The (general) need for regulators to educate and support regulated entities to help them understand their obligations is not in question. But rather that from time to time it may be necessary for regulator’s to provide regulated entities with more (specific) ‘support to comply’ materials or information. Such as when:

• regulators are establishing a new regulatory regime/scheme, i.e. with a defined honeymoon period, or a staged introduction of requirements or offences;
• the regulatory regime/scheme is offering an amnesty, i.e. think firearms amnesty; or
• the regulated industry or sector has gone through some major disruption or regulatory failure which is beyond their control, i.e. think Covid-19 or the Global Financial Crisis respectively.

Conclusion

Regulatory posture, no matter how framed, is a real issue for regulatory practitioners, regulatory managers, regulatory executives and regulatory boards.

We believe a defined, documented, and demonstrable regulatory posture has significant benefits for regulators, including that it can assist with:

• regulatory practice;
• regulatory delivery;
• regulatory outcomes; and
• advancing the regulatory profession itself.

We leave you with three key points to reflect upon, using different regulatory postures and different dogs as a point of comparison:

• agencies often gravitate to one type of dog, because they are familiar with that dog;
• agencies are complex, they can’t just have and rely on one type of dog; and
• agencies should be thinking of the benefits of using different dogs, rather than a specific type of dog.

Finally, whatever your choice, make it purposefully – and don’t let the tail wag the dog!

Dr Grant Pink, Pracademic Advisor ANZSOG NRCoP, Managing Director RECAP Consultants, and Adjunct Professor (Regulation and Enforcement) University of Tasmania.

Grant has more than 25 years regulatory and enforcement experience spanning practitioner, management, executive, academic, and consultancy roles, operating at local, state, national and international levels.

Grant has written more than forty articles for practitioner and academic publications in the areas of regulatory practice, capacity building, networking, and collaboration. In 2021 he authored the book Navigating Regulatory Language: An A to Z Guide.

Academically Grant has a MA by research in regulatory and enforcement networks (2010), and a PhD which considered how regulators build, maintain, and sustain regulatory capability and capacity (2017). In 2016 Grant founded RECAP Consultants Pty Ltd (RECAP). RECAP is a specialist regulatory consultancy providing services domestically and internationally.

Adam Beaumont, National Committee member ANZSGOG NRCoP, and Managing Director With Purpose Solutions.

Adam has more than 25 years regulatory, compliance, and enforcement experience spanning practitioner, management, executive, and consultant roles, having operated at state, regional, national and international levels.

Adam is an experienced facilitator, leader and communicator with a background in regulatory practice, community engagement, advocacy, behaviour change, supply chain regulation, governance and natural resource management.

Academically Adam has a MA of Environmental Law, and a BA in Forest Science (Hons.). With Purpose Solutions is a specialist consultancy to the private sector, governments, national and global not for profit organisations, major brands and retailers.

[i] See Pink, G. (2021). Navigating Regulatory Language: An A to Z Guide. Canberra: RECAP Consultants Pty Ltd. (p. 231).

[ii] See Pink, G. 2021 (pp. 231-232).

[iii] Use of the word attack here is not meant to imply aggression. It is a reference to having the tenacity and ability to ‘fight’ as part of prosecution or litigation that can occur in confrontational and adversarial contexts.

[iv] The three main regulatory domains are economic, environmental, and social. It is not uncommon for a regulator to be anchored in and/or identify strongly with one domain, with their regulatory work intersecting with two or all three domains. For additional information see Pink 2021, p. 216.