If only we knew for sure! What we do know is that in the area of regulatory enforcement the last couple of years have brought great changes – new legislation, new case law and a new political emphasis. This trend is set to continue. In this final guide we pick out some issues to keep an eye on.
Regulation, Regulation, Regulation
David Cameron spoke recently about the "all pervasive rules culture". We have a Better Regulation Executive and a Minister for Business and Regulatory Reform. The debate about getting the balance right between improving standards by regulation, and stifling innovation by red tape will continue, whoever forms the next government.
We consider that, for all the politicians' rhetoric, regulation is here to stay even if the pace of introduction of new law slows. Compliance is a business risk to be managed like any other.
There is currently a consultation by the Sentencing Guidelines Council on sentences for offences that cause death. The consultation period ends on 5 January 2010 and final advice is expected during next year.
While the proposals are not as harsh as was once suggested (linking fines to turnover), it is still likely that there will be a significant increase in fines in fatal cases. The recommendation is that fines should start at £500,000 for corporate manslaughter and at £100,000 for offences under the Health and Safety at Work etc Act 1974. This increase may well filter down to lesser health and safety offences and then to regulatory breach generally.
The Corporate Manslaughter and Corporate Homicide Act 2007 allows the court to make an adverse publicity order, requiring the convicted defendant to publicise its guilt in the way the court imposes. The consultation anticipates that this penalty will be given as a matter of course. It only applies to corporate manslaughter at present but it is seen as an effective punishment. Will we see it extended to other offences in future?
We consider that over the long term, penalties for regulatory breach will continue to become more onerous.
The Regulatory Enforcement and Sanctions Act 2008 gives regulators the ability to obtain powers allowing them to issue a range of additional sanctions without the need to go through the criminal courts. They include extended fixed penalty notices, variable monetary penalties and restoration notices (for more information read our earlier alert 'Striking up a partnership: the Regulatory Enforcement and Sanctions Act 2008 - a summary for businesses'. The Government is currently giving these extra powers to environmental regulators. Local authorities are keen to follow suit.
We consider that in the future, regulators will have a wider range of penalties available. These will be quick to administer, potentially expensive and at the discretion of the investigator. They may be more proportionate but they may not always be fair. Sometimes this will benefit business, sometimes not. Either way, the landscape will change.
The campaign for directors to be given specific duties in relation to health and safety rumbles on. A further call for it was made by Rita Donaghy in her recent report into deaths in the construction industry. The Health & Safety Executive frequently return to the question.
We consider that this debate will continue although, as directors can be prosecuted already, it may not be a priority in the immediate future.
Costs in criminal cases
An acquitted defendant can ask the court for payment of its costs from central funds. At the end of October 2009, for the first time, the Lord Chancellor set the rates to be applied, capped at legal aid rates, even for companies. As a result, insurance premiums may go up to cover the cost of the shortfall between costs recovered by an acquitted defendant and actual defence costs. Successful defendants may also start to apply for costs directly against the prosecuting agency.
There may also now be arguments by convicted defendants that the costs of successful prosecutions should also be capped at legal aid rates. There is already evidence of a trend towards greater scrutiny of prosecution costs.
In addition, requests by prosecutors for compensation payments to be made to emergency services for responding to the incident which led to the prosecution are now being made. With increasing pressures on public spending we anticipate that we will continue to see more of these more vigorously pursued.
We consider that costs are therefore likely to form a greater part of regulatory prosecution cases in the future.
One thing we are sure that the future will bring is the need for organisations to help themselves by using legal experts in this complex area to ensure they get the most appropriate and cost-effective advice in terms of preventing breaches and reducing penalties and legal costs should the worst happen.