October 8, 2014 – Provincial governments should take steps to improve consumer protection in the rules and powers of self-regulating organizations (SRO), according to a new C.D. Howe Institute report. In “Who Watches the Watchmen? The Role of the Self-Regulator,” author Robert Mysicka finds that, for certain self-governing professions, the public interest is not being adequately protected.
“As Canada continues to move towards granting more professionals and other occupations with the right to self-regulation, it’s important that there be enough constraints against self-interested and anti-competitive behavior,” states Mysicka.
Using examples from the insurance and real estate industry, the author considers the need to review and put appropriate constraints on SROs, as these organizations have an impact on affordability for consumers and economic competitiveness in the Canadian economy.
The chief concern with SROs is that the incentive structure driving the development and political empowerment of these organizations can lead their members to develop rules that promote their own economic interests, often at the expense of public-interest objectives. This is a particular risk with professional licensing regimes that can disrupt competition through barriers to entry and limitations on forms of practice.
The impact on competition is of particular concern in Canada, where labour productivity in the professional sector is approximately half that of the same sector in the United States. Canadian professions are in the bottom fifth of labour productivity among Canadian sectors.
The author recommends that governments structure legislative and administrative frameworks of self-regulatory regimes to protect the public interest in competition and limit abuses of power.
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. It is Canada's trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review. It is considered by many to be Canada's most influential think tank.
Click here for the full report.
For more information contact: Robert Mysicka, JD, or Benjamin Dachis, Senior Policy Analyst, C.D. Howe Institute. Phone: 416-865-1904 Ext. 9997; E-Mail: kmurphy@cdhowe.org.