Dutch market regulators issue recommendations for increasing oversight effectiveness
Successful market oversight calls for consistent government policies. This means that regulatory policies should give special attention to the independent nature of oversight, the relationship between oversight and policy-making, the expectations of lawmakers and the public, and oversight transparency.
This is what the so-called Consultation Forum of Regulatory Bodies (MTB) has advised the Dutch Ministry of the Interior and Kingdom Relations in a letter. The Ministry had asked the market regulators participating in the MTB to formulate a joint statement on the newest, so-called ‘Framework-determining Vision on Oversight,’ in which the government explains the boundaries within which it intends to operate in a regulatory context. Participants in the MTB are the Netherlands Authority for the Financial Markets (AFM), the Dutch Data Protection Authority (CBP), the Netherlands Consumer Authority, the Dutch central bank (DNB), the Netherlands Competition Authority (NMa), the Dutch Healthcare Authority (NZa), and the Netherlands Independent Post and Telecommunications Authority (OPTA).
The letter to the Ministry marks the first time the MTB has issued a joint statement. In its letter, titled ‘Effective Market Oversight,’ the MTB explains: ‘Market oversight is mission-driven oversight. The desired effects of oversight are central. Mission-driven oversight entails much more than just the rigorous use of powers when applying and enforcing certain regulations. The instrument that will be the most effective in order to realize the desired objective is determined on a case-by-case basis.”
‘Market oversight should not be influenced by the “political topic of the day” or by industry interests. Political interference is undesirable, and European law often prohibits such interference.’ At the same time, the MTB is in favor of direct relationships between parliament and regulator, so that regulators can inform the Dutch House of Representatives.
‘To ensure the regulators’ independent positions, it is important that, for example, their budgets are sufficient and that these budgets enjoy long-term stability in order for the regulators to exercise their powers and carry out their responsibilities.’ The MTB recommends limiting the liability of regulators carrying out their oversight duties in good faith.
The MTB aims to increase the ‘safeguarding of a permanent dialogue between regulators and policymakers about the effectiveness, feasibility, and enforceability of proposed regulation in practice. It should be obvious that, in order to have a healthy working relationship between market regulators and their respective ministries, it is vital to have a permanent, structured, and open dialogue, one in which solving market problems is central.’
According to the market regulators, it must be realized that a risk-free society does not exist. ‘Within its budgetary boundaries, market oversight can take away some of the risks out there, but this has its limits.’ They consider it their responsibility to make sure that others have realistic expectations of what oversight can do.
‘A good regulator explains why it enforces oversight, and provides insight into the regulatory choices it makes.’ The market regulators see that the public calls for transparency, but that statutory restrictions may not always allow them to be transparent. That is why the existing regulations on transparency should be re-evaluated. ‘Having the legislature and regulators come up with customized solutions is the key here. What is desirable transparency to one market regulator may not be to another.’