OECD best practice principles for regulatory policy: Reviewing the stock of regulation

by Maria Bianca Armiento

On December 2020, the 4th, the OECD released the definitive “Reviewing the Stock of Regulation”. Core concepts and issues contained in the draft were maintained. The report is now structured into 9 parts, discussing several issues about reviewing the stock of regulation.

The 2019 public consultation on the draft Best Practice Principles for Reviewing the Stock of Regulation

In 2019, the OECD presented a public consultation for the document OECD Best Practice Principles for Regulatory Policy: Reviewing the Stock of Regulation. The draft is structured into 11 “parts”. In each part, best practices are often recalled and analysed. 

Part 1 (“Introduction”) focuses on the importance of the “review” concept: before rules are implemented, they should be assessed, even though possible effects may remain unknown. Existing regulation should be evaluated for several reasons. First, the lack of assessment may lead to the accumulation of pieces of legislation, therefore increasing costs and reducing benefits. Second, ex ante evaluation and ex post review are strictly related, since they are both part of the regulatory cycle. Third, review may prove a powerful tool for enhancing trust in regulators. 

“Overarching Principles” of review are described in Part 2. Three main principles should govern regulatory activity. First, regulatory policies should permanently incorporate ex post reviews as part of regulatory cycles. Second, a sound system for the ex post reviews of regulation would ensure comprehensive coverage of the regulatory stock over time. Third, reviews should include evidence-based assessment. 

Part 3 examines the “System Governance”. The draft addresses possible solutions to ensure that review is properly conducted, including oversight and accountability, arrangements that could combine oversight of the ex ante and ex post assessment; the need for review at the time regulations are delivered; and notice of forthcoming reviews of regulation. This Part also makes reference to countries in which such virtuous practices are already implemented (e.g. the Regulatory Scrutiny Board that conducts reviews of ex ante impact assessments, as well as selected ex post evaluations). 

Photo credit: OECD

Part 4 (“Broad approaches to Review”) examines several approaches to ex post reviews. Hence, experiences already occurred in other countries are analysed, including such as the need for a legislative framework about review requirements for regulations that have a deep impact on society (as it happens in Hungary, Korea and UK); sunset clauses. It also encourages uniform criteria for review and ‘in depth public reviews’ to allow people and stakeholders to give feedback (recalling the experiences of French Court of Auditors or Italian inquiry for food business), just to mention a few. 

The “Governance of Individual Review” is addressed in Part 5. Among the principles that should guide such a governance, the Draft includes proportionality, the need that reviews are conducted by departments having policy responsibilities, absence of conflict of interest and independence of regulators, and transparency

Part 6 deals with “Key Questions for Reviews”. They include appropriateness of reviews (i.e. they should “address as a threshold question whether a valid rationale for regulating still exists”), effectiveness (i.e. they should assess whether regulations achieve particular objectives), efficiency (regulations should not give rise to unnecessary costs), and alternatives (reasons for reviews should always be evaluated). 

Part 7 scans possible review methodologies such as cost-benefit analysis, feasibility and cost effectiveness of quantification, evidence-based assessment, and counterfactual analysis. 

“Public Consultation” is the core topic of Part 8. Consultations should be required when reviews are likely to affect society as a whole and should be proportionate to the “significance of the regulations and the degree of public interest or sensitivity entailed”. 

Part 9 “(Prioritization and Sequencing”) sets some principles for choosing which regulations should be chosen first for assessment. Priority should be given to regulations that mostly affect economy, citizens and that might prove problematic: therefore, sequencing is particularly important. Moreover, reviewing regulations as a group rather than singly could be more beneficial. 

Part 10 discusses “Capacity building”: it is crucial that public administrations have “in house” capability and expertise in evaluation and review methods. 

Finally, Part 11 analyses “Committed Leadership”. It is essential that politicians are supportive to the effectiveness of a review system and that senior officials promote a “culture of evaluations” in their organisation.