In most democratic nations the ‘regulatory state’ has become so pervasive that almost every aspect of life, especially commercial life, is impacted by regulation and regulators.  At the same time societal and political expectations pull regulators in different directions.  Despite this attention, and their importance, most regulators suffer from chronic flaws and false operating assumptions.  

This paper identifies 12 systemic flaws and false assumptions that result in unreconcilable expectations for regulators and damage to their credibility. They also reveal deep long-standing constitutional anomalies in the operation of regulators within government; specifically, a failure to properly oversee regulators and hold them to account.  This impacts regulators’ democratic legitimacy, credibility, and operational effectiveness.  It also means that most regulators do not benefit from an architecture that supports operational success; indeed, many are designed to fail.  

Key systemic flaws

• Regulatory systems (in their entirety) are rarely properly designed; and if they have been, the design quickly becomes outdated.  
• Regulators often lack precise and meaningful role clarity in their governing statutes (or foundational documents).
• It is often unclear how independent a regulator is (or should be); and where they are nominally independent, very often that autonomy is (in practice) diluted.
• Many regulators suffer from sub-optimal internal corporate governance structures.
• Regulators often have poor external accountability structures, usually because of ineffective external oversight bodies, especially parliamentary committees.
• Measurements of regulatory effectiveness are immature, lack uniformity and consistency, and often focus on outputs, not outcomes.
• There is insufficient recognition that, in addition to legitimacy, ‘regulatory credibility’ is foundational for a regulator to be effective.
• Regulators often must administer overly complex, voluminous, out-of-date, and/or frequently conflicting legislative regimes.
• Regulators are usually operationally overburdened and budget constrained.