Introduction

The regulatory environment will be defective if it does not assist in achieving the intended regulatory effects. Exceptionally, a regulatory intervention might be designed to have a purely symbolic effect, that is to say, its intention might be to make a moral statement rather than to actually change the conduct of regulatees. In such a case, regulatory effectiveness is, so to speak, intrinsically secured. Typically, however, regulatory interventions are designed to channel and to change conduct; the effectiveness of such interventions is not intrinsically secured; and the measure of effective regulation is whether the intervention impacts on the conduct of regulatees in the intended way. What, though, is the key (or what are the keys) to regulatory effectiveness? What is it about a regulatory environment that promises to make it fit for purpose?

Turning this question round, we might suppose that, in principle, there are three ways to account for a regulatory intervention that fails to be effective. First, there might be a failure with the regulators themselves; whether for reasons relating to a lack of regulatory integrity or intelligence or arising from a lack of resource, regulators simply do not go about their business in a way that serves the regulatory objectives. Second, there might be resistance on the part of regulatees; for whatever reason, regulatees do not comply. Third, the failure might be explained by the intervention of a third party, including a rival regulator, or by some circumstances that lie beyond the control of both regulators and regulatees. This being so, we can say that a particular regulatory environment will promise to be effective where regulators are competent and properly equipped for their task, where regulatees are disposed to comply, and where there are no disruptive externalities.