Pentti M

1
Pentti MäkinenCentral Chamber of Commerce of
FinlandBenefits of low regulation
environmentBrussels 13.12.2006
2
Low regulation environment

• The idea of low regulation environment in
  professional services in Finland
• In history heavy and extensive regulation of the
  whole Finnish economic system
• In future improving the quality of legislation
• Better regulation initiative regulation of
  professional and other services as a substantial
  part of Government legislative agenda
• Focus on the role of enforcement of competition
  law in professional services

3
Why low regulation model (1)

• Re-thinking of Finnish enterprise policy
• ? Less costs and less bureaucracy for
  enterprises prefer notification instead of
  licenses easing of registration formalities
• Benefits of low legal environment
• ? Improving the competitiveness of economy as
  whole
• ? Clear advantages for consumers and other
  clients
• welfare no extra costs for consumers or
  enterprises
• ? Enhancing competition combination of high
  quality of services
• and reasonable prises
• ? Significant increase of productivity in
  business services in 1990s

4
Why low regulation model (2)

• Improving competition on domestic market as one
  of the leading ideas of low regulation
• Low regulation model gives less reasons to
  justify national restrictions on freedom to
  provide services European-wide. Importance of
  liberalisation the regulation of professional
  services on European level
• Restrictions should not be justified by
  protection of profitability of service providers
• Not only low but also better regulation is
  needed

5
How reached low regulation environment

• From heavy and extensive regulation to low
  regulation environment
• Systematic liberalisation in Finland substantial
  deregulation of the whole economic system in the
  late 1980s
• Eliminate legal barriers and other restrictions
  to market entry
• Professional services included
• New way of thinking corporist economic model ?
  more market oriented economic model
• Strengthening the role of competition policy as
  a basic element of the Finnish economy

6
Professional services in Finland

• Different variation of professional services
• No exact legal definition in Finland ? different
  variations of regulation
• From heavy regulated (pharmacies, accountancy) to
  services with no sectorial-spesific regulation
  (consultancy services, marketing services)
• Different reasons for regulation strong public
  interest (security services) or consumers (real
  estate agents) or both (financial services)
• Different kind of clients (business, consumers)

7
Different types regulation of services

• Specific regulation legal services, auditing,
  medical care, financial services, security
  services
• Non-sectoral specific regulation to service
  providers book-keeping, accounting,
  architectural, engineering, technical and other
  consultancy services, logistics services,
  marketing services, patent and trademark
  registration services, translation services etc.

8
Ensure the quality of services (1)

• Control of the quality of the service provider
• Predictable professional requirements for all the
  service providers
• Reasonable degree of regulation
• Open and transparent examination
• Free market access all those who has proved
  their qualification
• Code of conduct/ethical codes enhancing the
  quality of services

9
Ensure the quality of the services (2)

• Taking care of consumers interest in individual
  cases
• effective consumer protection system
• free access to justice for all consumers
• Importance of continous supervising
• Systematic follow-up of all the service providers
• If necessary immediate intervention by
  authorities or self-regulated bodies
• Effective tools for interventions

10
Succesfull deregulation

• Strong role of competition rules and competition
  authorities Abolished anti-competition measures
  against naked horizontal restrains on price and
  market division agreed by liberal profession
  associations
• Maintaining high-level and effective
  consumer-protection general system instead of
  sectorial spesific regulation
• No damage for the public interest (grey economy,
  corruption, access to services)

11
Effective consumer protection

• Consumer ombudsman is promoting the interests of
  consumers
• ? Advertising and marketing
• ? Terms of contracts
• Price-information demanded by law
• Possibility for individual consumer to evaluate
  afterwards whether the paid price has been
  reasonable

12
Better regulation and professional services

• Clear link between low regulation of professional
  services and development of the whole legal
  system
• Vital interest to assess the impact of
  legislation its alternatives in a systematic
  manner and on basis of adequate comparative data
• What is the impact on business activities,
  productivity and competitiveness ? both general
  and sectorial spesific information is needed
• Problems
• ? Lack of legislative research with a focus on
  economic argumentation as a background element in
  law drafting
• ? Lack of relevant both economic and
  non-economic analyzes
• Too detailed legislation might damage the
  flexibility in economic relations
• Simplification cost of administrative burden and
  need of external experts

13
Auditing (Finnish speciality)

• Auditors are already heavy regulated (Auditing
  Act) and new proposal will continue on the same
  line
• Auditing act contains the basic and the general
  regulation of the authorisation and supervisory
  organisation
• A kind of co-regulation
• Legal basis In the Chamber of Commerce Act is
  stated that Chamber of Commerce shall carry out
  the duties, which are prescribed in the Auditing
  Act)
• Proposed Auditing Act contains new task to
  chamber of commerce to supervise also the quality
  of auditors

14
Self-regulation (Finnish examples)

• Benefits reliable, cost-effective and
  independent from authorities
• Compliance with the competition law
• No legal basis totally voluntary systems
• (I) Property valuation
• Property valuers are authorized and supervised by
  Chamber of Commerce
• Examination and complaints
• (II) Good inspections
• Experts are professionals in their special
  fields and they are authorized and supervised by
  Chamber of Commerce
• The role chamber of commerce as an independent
  business organisation is essential