Assessing the Mandatory Accountability of Regulatory Agencies

Christel Koop

Introduction

Over the past three decades, regulatory agencies have become increasingly important actors in the policy process. While the role of government in the provision of goods and services has been reduced in most established democracies, the number of regulatory activities has increased, which has led scholars to coin such terms as 'the regulatory state' (Majone 1994b) and 'regulatory capitalism' (Levi-Faur 2005). Yet rather than relying on ministerial departments for the development and implementation of regulatory policies, governments and parliaments have tended to delegate these responsibilities to agencies that operate at arm's length from ministerial hierarchies and the political process (Gilardi 2005, 2008; Jordana et al. 2011). These independent agencies are not only involved in policymaking at the national level, but they also participate in international policy networks, particularly at the European level (Coen and Thatcher 2008; Maggetti and Gilardi 2011). Hence, they are 'the main institutional characteristic of the regulatory state' (Gilardi 2008: p. 21; cf. Levi-Faur and Gilad 2004).

While the political insulation of regulatory agencies is considered to enhance the credibility of regulatory policies and the expertise incorporated into regulatory decisions (see Majone 1996; Vibert 2007), it has raised questions of accountability. As independent agencies are exempted from political involvement in the decision-making process and from the control mechanisms inherent in the ministerial hierarchy, they have more policy discretion as well as more opportunities to shirk and use their political power arbitrarily than do ministerial departments. To deal with these issues, politicians can incorporate provisions for accountability into the statutes of the organizations. As these statutory provisions take the form of requirements, this chapter refers to them as forms of mandatory accountability. Mandatory accountability is defined as the degree to which an actor - in our case, a regulatory agency - is required to offer information on, and explanations of, his or her conduct to another actor, and may be sanctioned for this conduct (cf. Koop 2011, 2014). Regulatory agencies may be obliged to render account for their finances, their performance and/or the fairness of their activities, and such mandatory accountability may be upwards, horizontal and/or downwards by nature (see also Chapter 1 of this volume).

This chapter aims to provide an empirical contribution to the debate on accountability in regulatory governance by assessing the mandatory accountability of competition authorities and financial market regulators in 21 established democracies - the 15 'old' European Union member states and Australia, Canada, Iceland, New Zealand, Norway and Switzerland. Building on the literature on accountability, a framework for the assessment of mandatory accountability is developed based on the aspect of agencies' conduct for which they render account and the actors to whom they are accountable. This framework is used to address two related questions:

  • (i) What provisions for accountability do governments and parliaments incorporate into the statutes of competition authorities and financial market regulators?
  • (ii) What variation in the mandatory accountability of these regulators do we observe?1

As competition policy and financial market regulation are the areas of regulation most dominated by regulatory agencies (see Jordana et al. 2011), assessing the mandatory accountability of agencies in these areas allows us to compare accountability provisions across a significant number of established democracies.

The chapter is organized as follows. In the next section, the question why we want regulatory agencies to be accountable is addressed in more detail. Subsequently, a framework for the assessment of mandatory accountability is presented, followed by an analysis of the accountability provisions that are incorporated into the statutes of the two types of regulators, and an analysis of the variation in mandatory accountability. The final section discusses the implications of the findings, including the implications for the question of the democratic legitimacy of regulators.

 
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