Saturday, December 20, 2008

The future of regulatory oversight in Singapore - Madoff and the AVA

As if to reinforce the point, there on pg 30 of today's (Dec 21) Sunday Times is another report on the Madoff Ponzi scandal. The subtitle of the article reads: "Scandal could have been prevented of the financial system's gatekeepers had been competent and independent".

Yeah. Competence and independence.

I have no problems with the competence issue. We got lotsa smart people. It's fundamentally a problem of how they apply their smartness. Which has to do with the second attribute - independence. I have commented on this before in an earlier post.

No regulatory agency can do it's job properly if it is unclear where to focus its eyes on. How do you regulate if you are more concerned about the impact on the health of the industry you are supposed to be regulating? That's surely the role of 'the other agency'! I mean, isn't the role of the regulator to protect the consumer public against the industry's excesses?

But our regulators are invariably too concerned about not offending the industry, and not to be seen as being obstacles to the growth of the industry.

No? Well....just look at the structure of the regulatory agencies we have. They are invariably organically infused with a promotional mission. Look at how these agencies rank their performance...."Pro-Enterprise Index"? What are the parameters of these PEI? Compliance cost; Review of Rules;Transparency;Customer Responsiveness; andPro-enterprise Orientation.

Errmmm...nothing about the consumer in there. Who really cares about them?

This was what failed in the Madoff scandal. The industry was more important. This was what sowed the seeds of the current financial crisis.

And this was what lay behind the melamine hysteria.

Interestingly, on pg 12 of todays Sunday Times, there is a small article on AVA's response to the melamine thingy. Tessa Wong reports that the melamine saga cost the AVA $2 million to do 'additional laboratory tests'. Apparently, melamine was never considered a food contaminant.

Ho hum. Really? Did they not read the newspapers back in 2007, when there was this massive pet food recall in the US? Did they not connect the dots? Or were they just too concerned about their Pro-Enterprise Index ranking?

Yeah. Competence and independence. That's what we so badly need.

Is this just just one of my PMT days when I rant on aimlessly, and take potshots at aything that moves? No. We have been debating more serious issues about euthanasia and human organ trades. Much of the acceptance of of these highly controversial issues depends on our ability to trust in the regulatory competence and independence of the agencies in charge. We need to know that these agencies are focused on consumer/public protection, and not being primarily concerned with the health of the medical industry.

It's never going to work any other way. We need a major overhaul of the regulatory environment, especially those related to health and safety. We need to know that the ethical review processes are truly objective and are genuine advocates of patients and volunteers/donors (and not defenders of doctors/surgeons' and scientists' rights to exploit). We need to be assured that the regulatory agencies (AVA, HSA, Singapore Medical Council?) are true protectors of the consumer/public and not disguised promoters of the industry. And we need to have more than just verbal assurances that these august bodies are competent and independent. They need to be organically structured to have that independence of regulatory decision making.

Are these too much for a Christmas wish?

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