I’m linking to yesterday’s speech by Callum McCarthy concerning enforcement actions by the Financial Services Authority. It’s not directly on-point with Ofcom, but it is an interesting commentary on regulatory enforcement actions. McCarthy says:

“Parliament has made provision for those subject to enforcement action, if they disagree with the FSA’s decision, to take their case to a Tribunal, which hears the case not as an appeal, but de novo. It is of course correct that there should be this recourse to a body wholly independent of the FSA…. Increasingly, firms and individuals are making use of this right. It is entirely proper that they should do so if they wish. Access to an open, independent and impartial judicial process is a fundamental right and we welcome the role played by the Tribunal. But I think we should all recognise that if this occurs it inevitably leads to delay and to additional costs. It will mean the FSA having to devote more resources to enforcement…. The UK has traditionally enjoyed over North America the advantage of being a less litigious society. There is much to be lost if that advantage is eroded.”

McCarthy, of course, is looking at only one side of the litigation cost/benefit analysis. When litigation eliminates an unfair or incorrect regulatory action, it arguably benefits society - so being less litigious is not always good, unless you assume as McCarthy apparently does that regulatory actions always hit their mark.

McCarthy’s speech touches on some other regulatory themes, including regulatory certainty, consumer protection, and working with regulatees. It’s worth a read.