If your company has been prosecuted in respect of a ‘strict liability offence’ for which there is no statutory or due diligence defence or if your company has been the subject of a prosecution for an insignificant breach which could have been dealt with by way of a caution or administrative fine, you may well consider the present system is unfair and oppressive.

An interim report was published on 22 May 2006 which is likely to lead to major changes in the enforcement of regulations against industry and commerce. You have an opportunity to influence this review and create a system which is more transparent and flexible by making representations before 18 August 2006.

The review is led by Professor Richard Macrory, Professor of Environmental Law at University College, London, who proposes to introduce a more flexible, proportionate and transparent tool kit designed to ensure better regulation. The stated aim is to identify a range of suitable sanctioning options that should be available to allow regulators to deal appropriately with each type of offender.

The interim recommendations are:

1. Criminal proceedings: To be maintained in order to punish serious breaches, in particular where there is evidence of intentional or reckless behaviour or where the actual or potential consequences are so serious that public interest demands a criminal prosecution. Events causing fatalities, serious pollution incidents or serious financial irregularities are obvious examples of cases in which prosecutions will result.

2. Administrative penalties: Greater use of administrative penalties, and whilst three different models have been considered, the preferred one is a proposal that the Regulator has discretion to impose a fixed or variable fine which, if contested, the company can appeal to an independent tribunal. These could be used in cases where the unlawful activity has less serious or harmful consequences.

3. Statutory notices: A criticism of enforcement notices is that they lack flexibility and therefore it is proposed to strengthen the use of enforcement and improvement notices by ensuring that Regulators have mechanisms in place to follow them up.

There should be an ability for parties to agree an enforceable undertaking as an alternative to the imposition of a penalty or prosecution.

4. Restorative justice: Often it is in the interest of all parties for remedial actions to be taken to put right the fault. Three options are suggested.

  • As part of an investigation by a Regulator it could suggest a restorative justice process to the firm before commencing criminal proceedings.
  • In lieu of a fixed penalty
  • As part of the sentence to be imposed by a criminal court following prosecution.

Additional flexible powers for courts to use in addition to current sentencing such as conditional cautions or publicity order have also been suggested by the Review.

The closing date for consultation is 18 August 2006 and the final report will be published in the Autumn of 2006. Responses should be addressed to Macrory Penalties Review Cabinet Office - Better Regulation Executive, Kirkland House, 22 Whitehall Road, London SW1A 2WH. To view the report click (http://www.cabinetoffice.gov.uk/regulation/documents/pdf/macrory060524.pdf

Pinsent Masons’ Regulatory Team advises clients on all aspects of risk management, crisis management and damage limitation. Our team of highly experienced lawyers has extensive experience representing businesses in their dealings with regulators including Trading Standards, Environment Agency, HSE and Food Safety Authority.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.