Regulators can do more to reduce the compliance and enforcement burdens they impose on small businesses, such as many mortgage brokerages, according to a report released by the Productivity Commission.
The Commission argues that regulators should ensure they understand how regulation impacts on small business and keep the compliance capacity of small businesses at the forefront of their minds.
“A regulator's culture and attitude towards business can be as important as the content of the regulation itself. There is still significant scope for improvement in the way regulators engage with small businesses,” says commissioner, Dr Warren Mundy.
To secure benefits for small businesses, the report proposes a suite of changes which the commission believes need to be implemented by Commonwealth, state and territory and local governments. These include:
Regulators should adopt a multi-channel approach to communicating with small businesses with a focus on the brevity, clarity and accessibility of information.
Compliance and enforcement strategies should be proportionate to risks posed to communities and facilitate voluntary compliance.
Regulators should commit publicly to target timeframes for key processes, report on their performance in meeting targets and consider other measures to improve timeliness.
Regulators should have access to a sufficient range of enforcement tools and be resourced to do their job effectively, to avoid the shifting of direct and indirect costs onto businesses.
The commission also found that leading practices in regulator engagement with small business were more commonly adopted by regulators that have implemented a risk-based approach. A stronger focus on risk was found to limit unnecessary intrusion on lower risk small businesses, free up resources to improve frontline guidance and advice services and enable them to more effectively address higher risks to communities.
Furthermore, the commission found that regulators with effective risk-based engagement policies and procedures were more likely to be better resourced and to have senior leadership that invests in - and fosters - a business-focused culture among their staff.