Meta-regulation is state regulation to support business self-regulation.

The term ‘meta-regulation’ has been used to describe regulation for self-regulation in different ways. It is probably best known as a regulatory relationship between a regulator and a regulated business, where the regulated business develops its own rules or compliance approach, and then submits its approach to the regulator for approval.

This book takes a broader view, including third parties and the market as key drivers of business self-regulation in the public interest. The characteristics of this version of meta-regulation are as follows:

i. Formal rules are based on principles, not prescription, to allow for the necessary flexibility in regulatory practice.

ii. Law (the regulator) is reflexive and responsive (although this means different things in the detail), in order to learn about what works to meet the public interest and to include relevant stakeholders in regulatory processes. Meta-regulation is intended to relieve pressure on a regulator’s resources by allowing the regulator to step back and observe self-regulation, taking investigative action only where a regulatory breach is identified.

iii. Third parties such as non-government organisations and activists support regulation by acting as ‘civil regulators’, providing further relief for regulatory resources as well as reducing the chance of regulatory capture by industry. Third parties are involved in consultation for policy formation, to make sure that the right values are embedded in rules. They are also involved in enforcement, via monitoring and using business reputation in markets to force business self-reflection and culture change.

iv. Business self-regulates within the above context (and is also reflexive and responsive). In addition to the threat of formal regulatory penalties for breaches, reputational damage – and by extension, market losses – is a threat where businesses do not respond appropriately. Businesses are expected to be aware of this and accordingly incentivised to prevent breaches of their ‘social licence’.

v. Transparency in business performance is promoted, specifically compliance and performance reporting (both self-reporting and regulatory reporting) to provide for third parties to have information to act upon under (iii) above and for industry self-reflection under (iv).