Regulation – A Sporting Analogy
Over the past few weeks, we have been e plaining regulation – defining its characteristics, reasons for and objectives of regulation, as well as various ways it can be implemented. Today, we want to summarize what we’ve presented so far to ensure we are all on the same page. Now this may not be the best comparison to make right now given the current state of West Indies cricket but think of regulation as the sport of cricket. In that analogy, the International Cricket Council (ICC) is the governing body for the sport and makes the laws and rules of the game that determine how it is played. These rules are designed to ensure that everyone involved in the game gets a specific benefit. The ICC benefits from sponsorship deals; the teams and their players get paid to play with added incentives for winning; the umpires get paid; and the spectators get great cricket and enjoyment from the game. If the rules of the game are not developed properly, or the interests of one group are disregarded, then problems arise. If the players and the teams are not paid well, then they won’t play. If the rules make the game boring, then the spectators won’t watch; and so on. In regulation the state plays a similar role – it makes the laws that govern how the industry operates. And these laws should consider the interests of all stakeholders – the state itself, the utilities and the customers. Common best practice is to have the input of all parties in the process of developing the rules. Taking the analogy further, utilities like the St Lucia Electricity Services Limited (LUCELEC) in electricity and Water and Sewerage Company (WASCO) in water would be the same as cricket teams such as Australia, India, Bangladesh and yes, the West Indies. Consumers would be the spectators, paying to see the game, like they pay for electricity or water. They have a vested interest in ensuring that they get the highest quality of service and at a price they can afford. In other words, that the teams play well, e hibiting the highest quality of skill, and that the ticket prices are not too high. Now, somebody has to ensure that the game is being played by the rules. That’s the job of the umpires. To do their jobs properly, they must understand the game, know the rules well, must not be biased towards any team, and their decisions must be made in accordance with the rules. And that’s what a regulator or regulatory body does in a properly functioning regulatory system. Like the umpires, they must understand the principles of regulation, know the laws and regulations well, and their decision making must be fair, transparent and according to the rules. As well, just like with the Third Umpire, the Match Referee, and the Disciplinary Committees that make provisions for reviews and discipline in the game of cricket, a regulatory system should include systems for redress so that customers as well as industry players can question the decisions of the Regulator if they think the decision made is unfair or incorrect. Also, the regulator must be able to take action to apply the appropriate penalties and fines against industry players who have breached the rules. So, just like in cricket, a regulatory system will only work if the rules are clear and all the systems are in place to ensure that decision making is fair and transparent so that stakeholders get the appropriate benefits from their participation. The starting point is to equip everyone with knowledge of the rules of how the ‘game’ should be played.