It is often thought that regulatory material is made of requirements, prohibitions and commands issued, and most often published, by governments and their regulatory agencies under Acts (statutes) passed by their respective legislators. Such material is often referred to as ‘delegated legislation’ or ’subordinate legislation’, or more broadly speaking, ‘regulations’, be it orders, regulations, standards or specifications or even – yes! – verbal or sign commands by police, air traffic controllers, to mention but a few.
Free market theories and regulatory environments cannot be reduced to such simplistic views of public administration fiats, or absence thereof, as the recent global financial turmoil unfortunately demonstrates.
The above list of government regulatory material and actions is not exhaustive and may involve, depending on the enabling statute, other types of legislative material and actions, such as treaties and non-statutory or foreign documents formally ratified or incorporated by reference into domestic legislation.
However, for the purposes of this blog, the terms “regulatory material” or “regulatory environment” include, as posted earlier, any private sector material, practice or framework that has a significant impact on the way the persons targeted by the regulatory material, traditions or frameworks conduct themselves.
These may be a statement of vision, purpose and objectives issued by the concerned regulatory agencies, or the terms of insurance policies issued by underwriters. They may also appear in the form of best practices, codes of ethics, resolutions, guidelines, policies, plans, etc. agreed upon by members of private associations and governing bodies. The regulated activity/environment may also be directly influenced by competition, a genuine concern for doing things in the industry’s or public’s interest, by professionalism, and out of concern for a positive public image.
Governments regulate mostly in formal ways and are subject to regulatory frameworks set out by statute. Private regulatory organizations operate more on the basis of consensual principles that are less formal, but nonetheless just as effective because of the industry-wide consensus underlying them.
Accordingly, the meaning generally ascribed to the term “regulatory”, namely in the private industry, is quite broad, as exemplified in the following contextual meaning taken NationMaster.com, among various sources:
“Business regulatory environment assesses the extent to which the legal, regulatory, and policy environments help or hinder private businesses in investing, creating jobs, and becoming more productive.”
Hence, the practical meaning of ‘regulatory document’ (or ‘regulatory material’) and ‘regulatory environment’ varies widely according to the context in which these terms are used.
So why cast such a broad net by ascribing a large and flexible meaning to the word “regulatory” as encompassing any document, authorized sign or verbal communication, by the regulatory frameworks, practices or traditions impacting on individuals’ and interest groups’ conduct? This is because, I would suggest, we are more capable, under this broad approach, to ‘think outside the box’ and, as a consequence, to better assess the merits of proposed government rules or of private industry conventions and agreements, while still being able to consider alternative and less formal options.