1. Introduction

This is an excerpt of Steinecke Maciura LeBlanc’s “Governance for Regulators” handbook. To view additional sections of the handbook, click here.

1. Introduction

Upon joining a Board[1] or committee of a regulator, you will want to know what you should do and how to do it. This Handbook explains the “how” part. How do you contribute to the activities of the regulator so as to have the greatest positive impact on the organization? Consider the following scenario:

Just Selected Scenario

Ernie Eager has just been selected to serve on the Board. Excited to get up to speed, Ernie arrives at 8:30 Monday morning with the intent of shadowing the CEO for the week to get a handle on the “nuts and bolts” of how the regulator operates. Any concerns?

While you have to give top marks to Ernie for enthusiasm, there are a number of problems with Ernie’s proposal. Ernie is assuming that a Board member’s role involves familiarity with the day-to-day operations of the regulator. Ernie’s proper role is at a much higher level, formulating policy and direction for the organization. In fact, shadowing the CEO would likely expose Ernie to confidential personal information from which Board members should be insulated. Such knowledge could even taint Ernie in dealing with specific matters in the future (at least for regulators where Board members serve on investigative and adjudicative committees). In addition, Ernie’s presence would likely interfere with the CEO’s ability and authority to perform their functions and distract somewhat from the effective operations of the regulator.

Board and committee members have a “fiduciary” duty towards the regulator and its public interest mandate. A fiduciary duty requires undivided loyalty to the organization and its objects; there can be no conflict of interest. A fiduciary duty also includes such obligations as keeping confidential information private and always acting with integrity.

Thus it is important for Board and committee members to know how to perform their significant work. In this Handbook we will review the different aspects of how such individuals help a regulator achieve success. Where there is good governance within an organization, every part of the organization works together effectively and with a high degree of trust in each other. Governance concepts should be implicitly applied after an effective orientation to them. Organizations that are forced to spend a lot of time navigating governance disagreements are at risk of becoming dysfunctional.

No two regulator bodies are identical in their governance approaches. Circumstances such as the specific mandate of the regulators, the details of their enabling statute, the nature of the profession being regulated, the history of the organization and even the personalities of those involved all contribute to variations in their governance approaches. However, there are shared themes that are common to effective regulators as well as common governance characteristics of ineffective regulators.

[1] The “Board” is sometimes called the “Council”. It is the group that has ultimate authority and responsibility for the regulator.

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