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Regulatory Enforcement and Sanctions Act comes into force


Regulators could be given the power to fine companies and order them directly to stop doing something under new laws to come into force in the UK on Wednesday.

The Regulatory Enforcement and Sanctions Act gives regulators access to new powers. The powers are not automatically awarded, though. The Act just makes it possible for a minister to award them to a regulator and are not available until a minister has granted them.

Most of the Act comes into force on 1st October. Other parts of it will come into force in April 2009.

"The new administrative sanctions are being introduced in order to provide regulators with a more consistent, flexible and proportionate set of sanctions to use when dealing with regulatory non-compliance," said an explanation of the new law from the Department for Business, Enterprise and Regulatory Reform (BERR).

The penalties are civil and are designed to give regulators an option that is not as time-consuming or risky as taking criminal prosecutions.

The law is a response to a review of regulation conducted in 2006 by Professor Richard Marcory. "The review noted that many of the current sanctioning regimes were ineffective, over-reliant on criminal prosecution and lacking in flexibility," said BERR's explanation. "His recommendations included introducing an alternative system of civil sanctions in order to set up a modern and targeted sanctioning regime that would enable regulators to match the sanctions to the circumstances of different cases."

Regulators who are given the power will be able to impose fixed or variable penalties on organisations which they believe are behaving unacceptably.

The Act could also give regulators the power to order organisations to stop certain behaviour or even take steps to restore a situation to how it was before the organisation broke any regulations.

"The purpose of introducing this new approach to regulatory enforcement is to improve current sanctioning regimes by giving regulators access to a range of powers – an extended sanctioning toolkit," said BERR's explanation. "Regulators will able to choose the approach that is best suited to the offence and the circumstances in which it was committed."

Regulators which could be granted the new powers include the Information Commissioner, the Gambling Commission, the Office of Communications (Ofcom), the Office of Fair Trading and the Competition Commission.

The Information Commissioner's Office (ICO) said that it had not asked the Minister for Justice to grant it the additional powers because it is engaged in separate negotiations with the Government about whether or not its powers would be increased.

BERR said that any ability regulators are given to impose the direct penalties should be used sparingly. "The new sanctions will not replace more informal methods of enforcement, such as advice or warning letters and should only be used where it is necessary and proportionate to do so," it said.

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