Contents

Chapter 20
Publication of enforcement policies

20.1We have made reference in this Report to the need for enforcement bodies to provide guidance on how they will enforce their regimes. The following enforcement agencies (or agents) can commence pecuniary penalty proceedings:

20.2In some cases, these bodies have been established specifically for the purpose of overseeing one or more statutory regimes. They have broad functions relating to the promotion of confidence in their regimes, providing information and promoting understanding of the relevant law, monitoring compliance, investigating conduct and conducting inquiries. In other cases, the enforcement role has been given to a more generally tasked body and is one of a very wide range of matters with which they are tasked. They all have a range of investigatory powers at their disposal.

20.3In all cases these agencies need to make decisions about whether and when to commence proceedings, which enforcement route to take (where they have options) and how to approach settlement negotiations.

20.4Public and industry confidence in the agencies will be helped by transparent, consistent and responsible use of their broad powers. A number of these agencies already operate under and publish their own enforcement guidelines and policies to ensure consistency and transparency on the factors that will be taken into account when an enforcement decision is made.

20.5We recommend that enforcement agencies armed with a range of sanctions and remedies, such as pecuniary penalties, should devise and publish such guidelines and policies. We note that some United Kingdom statutes require this of their regulatory agencies (or, in the absence of a particular agency, the appropriate Secretary of State), particularly where the agency has the power to impose substantial civil penalties itself.600
20.6In the criminal context, a decision to prosecute a Crown agency will be guided by the test for prosecution in the Solicitor-General’s Prosecution Guidelines.601  It is our understanding that pecuniary penalties were not contemplated in the drafting of the Prosecution Guidelines. As a result, one concern is that the terms of those Guidelines might tend to encourage the use of measures such as pecuniary penalties instead of criminal offences. In particular, Guideline 6.9.13 states that the availability of any proper alternatives to prosecution should weigh against a decision to prosecute.
20.7It is preferable, then, that enforcement agencies devise their own guidance, specific to the statutory regime they oversee. This has been achieved by the Commerce Commission in its Enforcement Response Guidelines and Criminal Prosecution Guidelines and the Financial Markets Authority’s Enforcement Policy and Prosecution Policy.602

20.8We recommend, then, that other enforcement agencies should follow suit. As a minimum, their policies should deal with how the agency will decide whether or not to commence court proceedings; where it has the choice, how it will determine whether to commence civil or criminal proceedings; and how it will decide to enter into negotiations for settlement and what process it will follow. Where relevant, agencies may wish to consider whether their guidance should vary depending on whether an individual, body corporate or Crown defendant will be involved. To illustrate, where pecuniary penalties arise in areas of Crown activity that require weighing factors such as broad ministerial discretion with the public good, a decision to take enforcement action will be much more complex.

Recommendation

R9 Enforcement agencies with the power to commence pecuniary penalty proceedings should develop and publish enforcement policies.

589Commerce Act 1986; Dairy Industry Restructuring Act 2001 and Dairy Industry Restructuring (Raw Milk) Regulations 2001; and Telecommunications Act 2001.
590Anti-Money Laundering and Countering Financing of Terrorism Act 2009; and Unsolicited Electronic Messages Act 2007.
591Electricity Industry Act 2010.
592Anti-Money Laundering and Countering Financing of Terrorism Act 2009; Financial Markets Conduct Act 2013; Financial Advisors Act 2008; Financial Service Providers (Registration and Dispute Resolution) Act 2008; Securities Act 1978, Securities Markets Act 1988; and Securities Trustees and Statutory Supervisors Act 2011.
593Telecommunications (Interception Capability and Security) Act 2013.
594Biosecurity Act 2003; and Hazardous Substances and New Organisms Act 1996.
595Telecommunications (Interception Capability and Security) Act 2013.
596Telecommunications (Interception Capability and Security) Act 2013.
597Delegated from Chief Executive of Land Information New Zealand. Overseas Investment Act 2005.
598Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
599Takeovers Act 1993.
600See, for example, Identity Cards Act 2006 (UK), s 34. See also the Regulatory Enforcement and Standards Act 2008 (UK), s 63, which requires that regulators publish guidance as to their use of sanctions under that Act.
601Crown Law Office Solicitor-General’s Prosecution Guidelines (2013).
602See Commerce Commission “Enforcement Response Guidelines” and “Criminal Prosecution Guidelines” (October 2013) <www.comcom.govt.nz> and Financial Markets Authority “Enforcement Policy” and “Prosecution Policy” <www.fma.govt.nz>.