Following the outbreak of coronavirus, our regulatory risk and compliance team held a series of webinars, during which they were joined by guest speakers from across the regulatory sphere. The sessions explored regulatory trends and the impact that the pandemic has had on organisations and regulators around the globe. Watch recordings of the webinars and read the key take away messages from the sessions below.
Learnings from lockdown
This webinar explores the lessons that can be learned from lockdown. We hear views on the improvised approach taken to regulation during the coronavirus crisis, and ask whether regulators responded quickly enough. Our expert regulatory risk and compliance team is joined by Jenny Pyper, Chief Executive of the Utility Regulator, and Ed Dodman, Director of Regulatory Affairs at the Ombudsman Service, for the first in our webinar series exploring regulatory risk in a post-COVID world.
Gordon Downie, chair of the discussion panel, shared the following key takeaways:
- Many stakeholders have risen to the short term challenge of ‘doing the right thing’ in the teeth of the lock down; regulated businesses have developed innovative approaches to maintaining and in some instances enhancing service to users; regulators have also stepped up to working in new, collaborative ways with businesses, users and government.
- An important challenge will come as we exit lock down and it becomes necessary to allocate longer term responsibility for ‘doing the right thing’ and for the (potentially huge) associated cost. At the heart of this allocation debate will be striking a sustainable balance between trust (on the part of users) and confidence (on the part of businesses).
- Whilst striking that balance will not be easy, there is a strong public interest in (more) collective action to put in place novel operational / governance frameworks to allow that to happen. Regulated firms in particular have an important opportunity to show leadership here (not least from the reputational perspective).
Rethinking Regulatory Priorities
In this webinar, we discuss how, whether, and even if we can re-impose the regulatory regime from before the crisis. Is there a need for transition? Is transition possible? And what would that look like in a world living with COVID-19? We hear from Nick Fincham, whose career has included senior roles at both the Civil Aviation Authority and Thames Water, Jennifer O'Neill, Senior Investment Consultant at AON, and Clare Foster, Head of Clean Energy at Shepherd and Wedderburn.
Chair of the discussion Gordon Downie shared the following key takeaways:
- The COVID-19 crisis has provided a number of valuable insights (and a wealth of data) for those operating in regulated sectors which can be used to accelerate or at least refocus existing conversations about pursuing long term priorities and how they are helped or hindered by pre-crisis modes of regulation. A refreshed notion of human worth and social inclusion seems to have a role to play in those conversations.
- The need to make bold calls on how to repair the huge economic damage caused by COVID-19 will test the ingenuity and resolve of regulators, policy makers, investors and users. It also offers an opportunity to ‘do regulation’ differently, whether in terms of re-setting regulatory priorities around longer term goals or values (such as the UN Sustainable Development Goals) or in terms of the engagement of users and wider society in policy-making.
- Legitimacy and trust are likely to remain key challenges for regulators and regulated businesses as we deal with the harsh realities of post-COVID-19 recovery. An increasing focus on environmental, social and corporate governance standards on the part of investors (reflecting the demands of their own regulators) and a more collaborative approach to problem-solving across regulated sectors should assist in meeting those challenges.
Towards Sustainable Compliance
How do firms balance regulatory compliance burdens within tighter budgetary constraints? In this webinar, we share views on whether existing governance models and approaches are sufficient to handle compliance risks, and how firms ensure they are getting the most out of external counsel in managing these risks. Our panel for this discussion features Michael Davies, Legal Director at ScottishPower, Matthew Peacock, Managing Partner of OMC Partners and Shepherd and Wedderburn colleagues Carolyn Lints and Sarah Leslie.
Gordon Downie, as chair of the discussion panel, reflects on some on key points from this session:
- COVID-19 has forced a ‘stress testing’ of current models for regulatory compliance risk assessment and management across all sectors, with key challenges for corporate boards, audit and risk committees, internal audit and compliance professionals around delivering assurance in the face of incomplete, uncertain and volatile data. Firms have had to be nimble in developing effective responses to regulatory improvisation (such as the increased use of guidance and injunctions to ‘do the right thing’).
- There is evidence of an understandable ‘pivot towards the operational’ as regulatory priorities have been reconfigured (at speed) to give much greater attention to operational risks, e.g., around the availability of people, premises and records. As we move beyond the (first) peak of the crisis, thoughts are turning to whether there will be a return to ‘business as usual’ compliance or whether and how the ‘BAU’ model can be improved in light of COVID-19 experience.
- Moving forward, firms are starting to learn the lessons of the COVID-19 crisis in terms of the ‘next normal’ for regulatory compliance risk assessment and management. Those include the potential value of greater peer-to-peer collaboration and benchmarking, which has been an important tool in figuring out how to manage the crisis in some sectors, as well as the innovative use of technology (particularly in terms of regulatory monitoring and risk analysis).
Regulating Through Disruption
How should regulators and regulated firms adapt to economic and market disruption? This session focuses on how emerging, disruptive business models should be regulated - will new regulatory approaches be needed? Guest speakers include Sonia Brown, Executive Director at VISA Europe, Angela Love, Director of Future Markets and Engagement at ELEXON, Sebastian McMichael, Senior Legal Advisor at Royal Mail Group and Gordon Downie from Shepherd and Wedderburn's Regulatory Risk and Compliance team.
Gordon Downie, chair of the discussion panel, shared the following key takeaways:
- The regulatory response to COVID-19 needs to take account of the sheer pace with which changes – in particular the shift to digital – have been taking (and continue to take) place, both in terms of ensuring that regulators ‘keep up’ with rapidly changing market and user dynamics and also ensuring that regulatory frameworks are sufficiently nimble, collaborative and flexible to adapt to further cross-sectoral challenges ahead.
- The way in which regulation is done is being transformed in ‘real time’ as regulated businesses and their customers come to terms with COVID-19 impacts on their business models, as the traditional rationale for existing regulatory rules and practices is undermined and as the digital shift enables new possibilities for, and expectations around, effective stakeholder participation, collaboration and engagement.
- It is critical to ensure that all customers – particularly vulnerable customers – share in the benefits flowing from innovation especially as the affordability concerns of households will grow in the post-COVID economic downturn. This issue is likely to be particularly acute in the context of capital intensive regulated utilities with significant fixed costs, although digital tools offer new opportunities to identify, and target support towards, vulnerable groups.
Delivering a Fair Deal in the Next Normal
How will regulators’ understanding of fairness and the role of markets change in the ‘next normal’? We hear from Professor George Yarrow, Emeritus Fellow at the University of Oxford, Stephanie Tobyn, Deputy Director for Consumers at the Office of Rail Regulator, and John Grady and Gordon Downie from our Regulatory Risk and Compliance team on whether existing models of regulation are delivering for consumers, and whether the economic concept of the 'consumer' is fit for the future.
Here are some short reflections from Gordon Downie, as chair of the discussion panel, on key take away points:
- Ensuring ‘fairness’ (particularly as regards outcomes) is a challenge familiar to regulators, who have to confront the twin challenges of how to interpret this inherently elusive concept and how it should be applied. Consumers (and consumer engagement) – finding out and responding to what consumers actually perceive to be fair (or unfair) – have a key role to play in tackling both of these challenges.
- The COVID crisis presents both short and longer term ‘fairness’ challenges. In relation to the short term (e.g. exploitative pricing of temporarily scarce goods), regulators should be cautious about hasty, overbroad interventions which may produce unintended consequences. On the other hand, regulators will (in collaboration with others) have to develop effective strategies to tackle the longer term fairness challenges in the post-COVID economy.
- Different groups in society have experienced the impact of COVID (and will continue to experience its consequences) in different ways that have to be taken into account by regulators. Designing regulatory obligations that recognise and respect these differences (and allow regulated firms a ‘fair’ return on the investment required) will not be easy, although the task may be facilitated by an underlying sense of inter-group solidarity.
For bespoke advice from our expert team on any of the topics discussed in this webinar series, speak to your usual Shepherd and Wedderburn contact or our COVID-19 Advisory Group.