21 YEARS OF REGULATORY INNOVATION THROUGH PROFESSIONAL STANDARDS PROFESSIONAL THROUGH INNOVATION REGULATORY OF YEARS 21

21 years of regulatory The evolution of the Professional Standards Councils innovation through professional standards

1997 Western Australia 1995 passes the The first meeting Professional of the NSW Standards Act 1997 1980s Professional (WA), creating the Insurance Standards Council WA Professional market crisis is convened Standards Council

1994 1996 1998 New South The first schemes are NSW passes Wales passes approved for engineers the Professional the Professional and solicitors under Standards Standards Act 1994 the Professional Regulation (NSW), creating the Standards Act 1998 NSW Professional 1994 (NSW) WA passes the Standards Council Schemes – 3 Professional Associations – 4 Standards Professionals – 396 Regulations 1998

PROFESSIONAL STANDARDS COUNCILS

PROFESSIONAL STANDARDS AUTHORITY

ADDRESS Level 2, St James Centre, 111 Elizabeth St. Sydney NSW 2000 PROFESSIONAL STANDARDS COUNCILS GPO Box 4021 Sydney NSW 2001

PHONE 1300 555 772 (toll-free) The timeline captures significant events 02 8315 0800 over the last 21 years including the dates on which all relevant legislation was passed EMAIL by their respective parliaments, and the [email protected] establishment of each State and Territory WEBSITE Professional Standards Council. psc.gov.au The evolution of the Professional Standards Councils 2009 The firstCover of Excellence® branded scheme commences in Tasmania on 1 June 2009 2005 Cover of Excellence® Tasmania passes the branded schemes are Professional Standards Act 2007 present in all states and 2000 2005 (Tas), creating the Tas Queensland passes the territories of Australia Professional Standards Council Professional Standards The Professional Over 38,000 2011 Regulations 2007 Standards Council The Professional Standards professionals are Schemes are mutually launches the Cover of Agreement 2005 was Victoria passes the covered across recognised in every Excellence™ brand for executed, providing common Professional Standards Australia by Cover of mainland state and 2015 1997 use by professionals who membership of State Regulations 2007 Excellence® branded territory participate in a scheme and Territory Professional schemes 2013 The number of Western Australia New South Wales The Professional approved and supervised 2003 Standards Councils and the members covered 1995 passes the passes mutual The NSW Professional Standards Agreement Over 55,000 by the Professional use by each council of a by schemes now The first meeting Professional Victoria passes the recognition legislation Standards Regulation 2005 was reviewed, after professionals are Standards Council common secretariat exceeds 69,000 of the NSW Standards Act 1997 Professional Standards under the Professional 2004 is repealed and which all jurisdictions covered across 1980s Professional (WA), creating the Schemes – 5 Act 2003 (Vic), creating Schemes – 8 Standards Amendment replaced with the entered into the Australia by Cover Schemes – 27 Insurance Standards Council WA Professional Associations – 7 the Vic Professional Associations – 8 (Mutual Recognition) Professional Standards Professional Standards of Excellence® Associations – 19 market crisis is convened Standards Council Professionals – 11,000 Standards Council Professionals – 19,063 Act 2007 (NSW) Regulation 2009 Agreement 2011 branded schemes Professionals – 69,197

1994 1996 1998 2002 2004 2006 2008 2010 2012 2014 New South The first schemes are NSW passes The NSW Professional Queensland passes the South Australia passes The Northern Territory Mutual recognition The number of members The Professional Wales passes approved for engineers the Professional Standards Council Professional Standards Act the Professional passes mutual recognition amendments are passed in covered by schemes Standards Councils the Professional and solicitors under Standards launches a grants 2004 (Qld), creating the Qld Standards Regulations legislation under the Western Australia through now exceeds 50,000 undertake a review of their Standards Act 1994 the Professional Regulation program Professional Standards Council 2006 Professional Standards the Professional Standards branding and change from

(NSW), creating the Standards Act 1998 Amendment (Mutual Amendment Act 2010 (WA) Cover of Excellence® to South Australia passes the First Commonwealth NSW Professional 1994 (NSW) Recognition) Act 2008 Professional Standards WA passes the Professional Standards Act representative appointed The Professional Standards Standards Council (NT) Schemes Schemes – 3 Professional 2004 (SA), creating the SA to the Professional Councils relaunch the grants Associations – 4 Standards Professional Standards Council Standards Councils The ACT passes mutual program nationally The number of members Professionals – 396 Regulations recognition legislation covered by schemes now The Northern Territory passes Schemes – 31 1998 under the Justice and exceeds 60,000 (60,747) the Professional Standards Associations – 13 Community Safety Act 2004 (NT), creating the NT Professionals – 39,709 The NSW Professional Legislation Amendment Professional Standards Council Standards Regulation Act 2008 (ACT) 2009 is repealed and 21 years of regulatory innovation through professional standards The Australian Capital Queensland passes replaced with the Territory passes the Civil © 2015 Professional Standards Councils of the Australian Capital Territory, New South Wales, the mutual recognition Professional Standards Law (Wrongs) (Proportionate Northern Territory, Queensland, South Australia, Tasmania, Victoria and Western Australia. legislation under the Regulation 2014 Liability and Professional You may copy, distribute, display, download and otherwise freely deal with this work for any purpose, Justice and Other Standards) Amendment Act provided that you attribute the Councils. You must obtain permission from the Councils, if you wish Legislation Amendment 2004 (commencing in 2005), to: (a) charge others for access to the work (other than at cost); (b) include the work in advertising or a Act 2008 (Qld) creating the ACT Professional product for sale; or, (c) modify the work. Standards Council The Northern Territory This document has been prepared by the Councils for general information purposes. While every care passes the Professional The Commonwealth has been taken in relation to its accuracy, no warranty is given or implied. Recipients should obtain their Standards Regulations Government passes own independent advice before making any decisions that rely on this information. the Treasury Legislation Schemes with mutual This document is made available on the understanding that the Councils will have no liability (including Amendment (Professional recognition begin to but not limited to liability by reason of negligence) for any loss, damage, cost or expense whether Standards) Act 2004 operate direct, indirect, consequential or special, incurred by, or arising by reason of, any person using or relying (Cth) which permits the on the information contained in this document and whether caused by reason of any error, omission or The timeline captures significant events Commonwealth to prescribe misrepresentation in this document or otherwise. schemes to limit the over the last 21 years including the dates Whilst the information contained in this document is considered to be true and correct at the date of liabilities of occupational publication, changes in circumstances after the time of publication may impact the accuracy of this on which all relevant legislation was passed associations under applicable document. by their respective parliaments, and the Commonwealth legislation Print version 978-0-9944805-0-7 establishment of each State and Territory The NSW Professional Professional Standards Council. Standards Regulation 1998 Online version 978-0-9944805-1-4 is repealed and replaced Published in December 2015 by the Professional Standards Councils. Contents

02 11 17 33 Acknowledgements The path to a new New accounting rules Professions will regulatory model for the global economy always have a role Present day Present

03 outlook Future Welcome 19 35 Legal sector faces Skill shock: The critical fundamental changes role of professional 05 History and evolution associations The professions and regulation 21 Engineers take a stand 37 Digital disruption in professional services 23 delivery Public interest and the Professional Standards Legislation 40 The future looks bright 26 Time for a global 42 discussion Grants program encourages new thinking 27 The UK landscape 44 is changing Professions in the age of regulation 29 The US looks to reform 46 its licensing system The Councils’ high-value approach

The Professional Standards Councils 51 are independent statutory bodies Professional established in each Australian state Standards Councils and territory under professional 1994 to 2015 standards legislation. The Councils and its agency, the Professional Standards Authority, work to improve 52 professional standards and protect The Councils’ aims consumers of professional services. Introduction 2

Acknowledgements

We acknowledge and thank the This publication would not following people and organisations have been possible without for their contributions and support the support of: for this book. Dr Deen Sanders, CEO and the staff of the Professional Case studies on professional Standards Authority standards and regulation in occupational associations: Editorial partner Lee White, CEO – Chartered Editor Group Accountants Australia New Zealand Creative design Nerida Wallace, CEO – Law Institute Clik Creative of Victoria

Stephen Durkin, CEO – Engineers Australia

The future outlook for professions: Dr Simon Longstaff AO, Executive Director, The Ethics Centre

Dr Marcus Bowles, Chair, The Institute for Working Futures Pty. Ltd.

Dr George Beaton, Partner, Beaton Research + Consulting

International perspective on models of regulation: Prof Andy Friedman, Professional Association Research Network (PARN) UK

Adam Parfitt, Executive Director, Council on Licensure, Enforcement and Regulation (CLEAR) USA

ARC Research project: Professor Dimity Kingsford Smith, The University of New South Wales 21 years of regulatory innovation through professional standards 3

Welcome

Professional Standards Legislation (PSL) came to life in NSW in 1994 and has since been enacted by every state and territory government. This innovative piece of legislation remains a unique and highly effective regulatory model and it is timely that we acknowledge its history of 21 years and look to its future potential. The legislation was born out of the vision of those such as the former Attorney-General of NSW, The Hon. John Dowd, AO, QC, who took the Occupational Liability Bill (1990) to the NSW Parliament, and the former Attorney-General of NSW and Minister for Justice, The Hon. John Hannaford, QC, who successfully tabled the Professional Standards Bill (1994).

Brian Rayment QC The vision of the legislation was to strengthen consumer protection and raise standards CHAIRMAN, PROFESSIONAL of professional service delivery while ensuring better access to professional indemnity STANDARDS COUNCILS insurance. That remains the focus of the Professional Standards Councils (PSC). I am privileged to have chaired the councils over the past 11 years. Technically each state or territory has an independent statutory body appointed by the Attorneys- General and relevant Ministers. However, by agreement between the jurisdictions, all 11 members of each State or Territory Council are the same people. I would like to acknowledge the very capable individuals, past and present, who have been appointed by the states and territories as members of the PSC. The council members remain dedicated to furthering professional standards in the consumer interest. On behalf of the PSC, I am delighted to present this book.

Australia’s unique regulatory and legislative model, the PSL, is now officially 21 years old. This book marks the occasion and acknowledges 21 years of regulatory leadership by the NSW Government and the PSC. Here we tell the story of the legislation and councils from their origins in NSW to their adoption and mutual recognition around Australia and the significant milestones along the way. We share the strengths of our current model of meta-regulation and discuss the future potential of this approach. Models for professionalism and regulation are discussed, and the key issues for the regulation of professions are considered. Our current research program is profiled and Dr Deen Sanders we look to developments in the US and the UK. CEO, PROFESSIONAL As part of our exploration, we profile some of the professional associations that STANDARDS AUTHORITY respond to PSL, their evolution over the 21 years and their perspectives on the future. This is followed by opinion pieces from external observers of professions who explore the key drivers of change and the issues professionals are now facing. In short, this book outlines the journey of professions in Australia and signals a compelling role for them into the future. We trust that those leading professions and influencing regulatory policy will find it insightful and informative. Introduction 4 21 years of regulatory innovation through professional standards 5

The professions and regulation

The most frequent question we are Models for regulating professions As the Professional Body asked is – what really is a profession. may also evolve as governments Sector Review 2014 points out, weigh the rising cost of regulation “widespread support for trustworthy While the word ‘profession’ means against growing consumer professionalism generated for different things to different people, expectations. individual professions can act at its core it’s meant to indicate collectively as a form of social trust and expertise. Given today’s The global debate about regulation in infrastructure for society”.2 environment in which knowledge the wake of wavering confidence in and expertise are changing rapidly, the ability of corporate regulation to The economy – Professions improve it’s generally understood that protect consumers emphasises the consumers’ access to services simply deriving an income from a important role of individual obligation and support economic activity by particular task may make you an on the part of the professional. encouraging confidence and trust ‘expert’ or ‘good at your job’ but in the services offered by In that evolving space, Professional being a ‘professional’ should have professionals. This is increasingly Standards Legislation (PSL) offers a broader meaning. important in our services-oriented an important way of encouraging economy where knowledge forms There’s a long history of attempts individual responsibility and the basis of many transactions. to clarify this meaning, which ensuring professions (via typically centre on moral or ethical professional associations) take Regulators – The burden of foundations within the practice of a their share of responsibility for regulation and supervision by specific and established expertise. consumer safety, expert members government can be reduced and public trust seriously. by improving the standards of In government, the interest in practice of professionals and the professions naturally revolves The value of professions regulatory capacity of professional around the role they play in An important feature of professions communities. It has been argued protecting the public and ensuring is that individual professionals benefit that professionalism represents a the efficient and expert performance from the respect and community distinct form of regulation in itself.3 of services. With that in mind, trust in their expertise. However, “Professions create and maintain a profession may be thought of we believe that the benefits of distinct professional values or moral as an occupational group with professions also encompass the obligations (e.g. codes of ethics)” specific higher education, expert following areas: according to Julia Evetts.4 Indeed, knowledge and a professional The community – Consumers face professionalism can be seen as a integrity framework that underpins a complex array of professional method of regulating and monitoring community trust, respect and services choices, from medical and the provision of complex services to recognition. health to business and financial the public.5 Professions continue to evolve as services. Professions play a vital community expectations evolve. role in providing trusted expertise Models for regulating Traditional ideals of professionalism founded on established standards professions may also are being challenged with changes that are policed to ensure community evolve as governments in technology and commerce and expectations of good practice and weigh the rising cost of even in the way new knowledge is social purpose are met. regulation against growing constructed between academic consumer expectations. and industry environments.1 Introduction 6

Professionals – Professions not The Professional Standards Councils • engages with the community and only improve employment and (PSC) takes a specific approach to is professionally and practically career longevity, but can also considering whether a profession responsive provide an important community meets an established set of statutory • is held to account by its members purpose and empowerment, allowing requirements. The Professional and the public, and ensures the people’s careers to contribute to Standards Authority (PSA) takes an transparency of professional the social good. Professionals even more detailed perspective in conduct issues enhance their reputations and skills working with associations to achieve • ensures the continuing by adhering to the professional readiness for that recognition, competence of members standards and requirements of including how an association: • maintains a formal register of their professional bodies. • implements and responds to professionals. legislation and its regulatory Professional recognition Regulatory options obligations Organisational theorists typically Governments have a range • responds to risks and the changing have focused on a set of objective of regulatory responses to expectations of the public traits to define whether a group consumer risk. The UK Better • ensures good governance is able to call itself a profession. Regulation Taskforce, along with • meets the financial and staffing For instance, in 1957, Ernest the Organisation for Economic requirements to run an effective Greenwood6 proposed that a Cooperation and Development profession profession required the elements (OECD) and Australia’s Office of • promotes and ensures the of a: Best Practice Regulation, have professional, ethical conduct of • body of theory common spectrums that tend to members • authority range from no regulation to the most • develops and provides guidance • community sanction interventionist position of prescriptive to members on good practice • code of ethics statutory regulation, as shown in the • professional culture. following table.

No regulation Self-regulation Co-regulation Statutory regulation

There are no explicit controls Regulations are specified, Principles-based regulation Regulations are specified, on an organisation. administered and as a form of self-regulation, administered and enforced enforced by the regulated where the government by the State. organisations. identifies the principles but the industry regulates the detail, may begin at this point. Regulations are specified, administered and enforced by a combination of the State and the regulated organisations.

Source: Bartle & Vass, Self-regulation and the regulatory state: A survey of policy and practice, Research Report 17, University of Bath, Centre for the study of Regulated Industries, October 2005. 21 years of regulatory innovation through professional standards 7

Professional regulation when done happens as a consequence of being Professional regulation properly relies on an understanding properly regulated and delivering when done properly between the profession and the better community confidence.10 relies on an understanding wider society that professionals will between the profession Who to regulate and recognise act in the public interest. and the wider society that under PSL professionals will act in Despite the spectrum of regulation Noting that governments have the the public interest. mentioned previously, it is often seen previously mentioned choices in as shared regulation rather than determining the best regulatory self-regulation, with governments responses, we apply a rigorous Frequently, the self-regulation end of delegating regulation to professional methodology to attempt to pinpoint the spectrum is the most highly rated associations as occurs in Australia areas of research and regulatory in the abstract environment of non- under PSL, and also in Canada. interest before they become a contested policy debate because source of substantial detriment. this reflects the benefits of self- Claude Balthazard, writing in To assist in this, we use a regulatory regulation delivering cost, efficiency, the context of human resources prioritisation formula developed in market independence and alignment professionals in Canada, argues independent research by Dr Deen of knowledge and oversight.7 that the first principle of professional 11 regulation is to protect the public, Sanders , CEO of the Professional Public expectations and media not to enhance the status of the Standards Authority (PSA) – see commentary in times of crisis profession, although this often below. inevitably will be directed towards increased statutory regulation.8 However, models of professional self-regulation or shared regulation Regulatory Prioritisation Equation are of increasing interest to both (Sanders 2010) regulators and professional + + associations.9 C EN R This is not only because of the Trust ES benefits of professions outlined C = Complexity earlier but also because the typical EN = Necessity goal of professions and government R = Risk arising from using non-expert is to encourage proper conduct Trust ES = Trust in existing expert sources as a solution across society so that the scarce resources of government can be directed to issues of larger concern to the population. Introduction 8

The regulatory prioritisation formula In the 21st century, professionals the meta-regulatory model of PSL can be used to highlight the most are increasingly working in represents one of our strongest tools appropriate groups for increased multi-disciplinary corporate to assure obligation and improved regulation and/or professionalisation environments that have a large standards in a responsive and based on: number of employees. They are encouraging way, and we anticipate • the complexity of the market also increasingly facing globally it will play an even larger role in segment connected clients and competitors, future regulatory design solutions • the necessity for engagement and new technology-enabled for government. • risk arising from using a non-expert business models. service provider It is also a challenge for This frequently gives rise to • trust in existing sources of government and regulatory professionals having multiple and expertise. systems to keep pace with often competing obligations – to changing work, service Of course, the benefits of shareholders, the company, their and employment models. professionalisation also motivate professions and the public. It is a occupations to undertake that challenge to juggle these obligations process on their own. As a result, while upholding professional the PSA is dedicated to working with obligations in environments where groups that are interested in and incentives and authority might have a capacity to participate in the challenge those loyalties.12 PSL. We consider that encouraging It is also a challenge for government groups to professionalise themselves and regulatory systems to keep pace before consumer risk arises delivers with changing work, service and a stronger public benefit. employment models.

Future regulatory challenges We contend that for policymakers to Balancing the issues outlined here maintain and strengthen consumer is a perpetual challenge, made protection in the face of these more so with changing technology, changes, we need to rely on an even the rapidly changing nature of more dynamic discourse between work and even the structures of regulators and professions. employment. Notably, an increasing As David Benton writes, professional number of professionals are now regulation is designed to “utilize either employed in or responsible the expertise of the profession, to corporate entities, when act to protect the public and the traditional model assumes simultaneously grant professions professionals work as individuals, the necessary autonomy to act often in small firms or as sole in a manner that avoids political practitioners, and usually with imperatives”.13 We believe that others from the same profession. 21 years of regulatory innovation through professional standards 9

References 1 Sanders, D., The legitimisation of modern professions (Professional enlightenment of financial planning in Australia), DProf (TransSt), Thesis, CQU, Australia, 2010. 2 PARN, Professional Body Sector Review 2014, PARN UK, 2014, 6. 3 Evetts, J., ‘Sociological Analysis of Professionalism: Past, Present and Future’, Comparative Sociology 10, 2011, 10; and E. Freidson, Professionalism: The Third Logic, Polity Press, London, 2001. 4 Evetts, J., ‘Sociological Analysis of Professionalism’, 10. 5 Evetts, J., ‘Sociological Analysis of Professionalism; and E. Freidson, Professionalism: The Third Logic. 6 Greenwood, E., ‘Attributes of a profession’, Social Work, 2, 1957, 44–55. 7 Bartle & Vass, ‘Self-regulation and the regulatory state: A survey of policy and practice’, Research Report 17, University of Bath, Centre for the study of regulated industries, October 2005. 8 Summers, L., ‘The Pendulum Swings towards Regulation’, Financial Times, 27 October 2008, 13. 9 For example, in Canada, Balthazard, C., ‘What does it mean to be regulated?’, Human Resources Professionals Association, 2010, and in the UK, Benton, D.C., Gonzalez-Jurado, M.A., & Beneit-Montesinos, J.V., ‘A structured policy review of the principles of professional self-regulation’, International Nursing Review 60, 2013, 13-–22; and ‘Fit and Proper? Governance in the public interest’, Professional Standards Authority for Health and Social Care, London, March 2013. 10 Balthazard, C., ‘What does it mean to be regulated?’ 2. 11 Sanders, D., The legitimisation of modern professions, op. cit. 12 Sanders, D., ‘Reinventing Regulation’, Law and Financial Markets Review, June 2014. 13 Benton, D.C., Gonzalez-Jurado, M.A., & Beneit-Montesinos, J.V., ‘Defining nursing regulation and regulatory body performance: a policy Delphi study’, International Nursing Review 60, 2013, 304.

Parts of this article have been published previously in Professionalisation of Financial Services (PSC: 2014). History and evolution The Professional Standards Legislation is a unique and progressive regulatory model, now with 21 years of history. It arose through remarkable vision prompted by an emergent gap in consumer protection.

In this section we look back to the origins and motivations for the legislation, and the historical events that led to the adoption and mutual recognition of such legislation around Australia. 21 years of regulatory innovation through professional standards 11

The path to a new regulatory model

Australia is the only country to have The principle was subsequently entitled Limitation of Professional a statutory scheme that limits the applied in Australia and it imposed Liability for Financial Loss stating that liability of professionals. liability for negligent statements professional bodies were the ones made by a wide range of best able to ensure any proposals This professional standards scheme professionals in a wide variety were appropriate and functional. puts a ceiling on the amount of civil of circumstances. As a result, The department recognised that liability a member of an accredited statements containing information, giving professional associations association may face. It is founded advice, opinions and promises all a more active role in maintaining on the tenets of the Professional had the potential to generate standards would encourage greater Standards Councils – to protect, liability claims. self-regulation with oversight by an improve and help consumers independent body. and the professionals offering the The lack of an upper limit worked services – and has developed over fairly well while the scale of claims In 1990, the then Attorney-General 21 years. was modest because professionals of NSW, John Dowd, AO, QC, were still able to get insurance cover. introduced the Occupational Previously, common law prohibited The insurance premiums were built Liability Bill (1990) NSW (the 1990 any recovery for economic loss in the into the professional’s fee, providing Bill) into the NSW Parliament “to absence of reasonably foreseeable an effective and equitable means of allow government approval of harm to a plaintiff personally. It spreading the cost of liability. schemes for professionals to provide was considered undesirable to for limited liability; compulsory expose defendants to potential However, the damages awarded by professional indemnity insurance; liability “in an indeterminate amount courts in professional liability cases risk management; and complaints for an indeterminate time to an gradually began to rise and, as a and disciplinary structures”.2 The indeterminate class”.1 result, insurance premiums jumped. 1990 Bill proposed a scheme of In some cases, insurance could not limited liability while establishing risk- be bought at any price. Ultimately, minimisation procedures and review practitioners began abandoning by way of a Standards Council. their professions because the costs and risks were becoming The Bill excluded liability for unacceptably high. damages arising from death or personal injury, a breach of fiduciary The fear of being sued made others Britain’s House of Lords duty, fraud or dishonesty. more conservative, and professional That changed in 1963 when Britain’s associations warned that members It detailed two schemes, neither House of Lords decided negligent might stop offering some services. being compulsory. The first limited advice could cause a breach of duty liability to a specified amount if The journey begins of care in regards to pure economic insurance against civil liability was Something needed to be done. loss. The decision had significant held to that amount or if business Pressure for government action implications for occupational groups assets were retained to that amount. was building and the first concrete as it opened the way for clients to “Business assets” were defined as response came from the Attorney- sue for professional negligence. “the property of the person which General’s Department of NSW. In is able to be taken in proceedings 1989, it issued a discussion paper for enforcement of a judgement of a History and evolution 12

performance and make them “The policy behind accountable to the community. this legislation The Bill required all associations accepts that it is with schemes to implement systems preferable to provide to manage and improve the quality, competency and ethical conduct of some guarantee of their members, and to hold them payment for the vast accountable. majority of claimants The Hon. John Dowd, AO, QC, former NSW As a minimum, the Bill required Attorney-General than to have a system an association to have adequate court, other than property which is of unlimited liability qualification requirements not used in the performance of the with no certainty of for its members, a code of person’s occupation”. any payment in many ethics, continuing professional The second scheme limited liability instances.” development, and complaints and to a multiple of the cost of providing disciplinary mechanisms. The Hon. John Hannaford, the service from which the liability QC, the then NSW Attorney- Although capped liability had arisen. The Bill also proposed General, when introducing existed elsewhere (such as for an Occupational Liability Council be the Professional Standards Bill, Hansard, Legislative motor accidents and workers’ established to help professionals and Council, 14 September 1994, compensation), the quid pro quo others improve their standards and pp 2933-5 – compulsory risk-management recommend which groups should strategies to minimise consumer be included in the Act. losses caused by professionals The Bill was unique. It meant The 1990 Bill remained on the table and compulsory insurance cover to occupational groups would commit of the House and was not debated ensure reasonable compensation – to improving professional standards until it was reintroduced into the was a significant innovation that and be accountable for consumer NSW Legislative Council on one NSW minister described as protection. For most, the “caps 14 September 1994 as the “epoch-making”. on liability” suggestion was the big Professional Standards Bill (NSW) attraction. The Professional Standards Act 1994 by the then Attorney-General 1994 (NSW) was passed on The Bill stipulated that the and Minister for Justice, The Hon. 12 December 1994 and came occupational associations’ John Hannaford, QC. into force on 1 May 1995. The relationship with the Professional Professional Standards Council of Standards Councils would be entirely NSW was formed in the same year. voluntary but with the understanding that they would be subject to It took a further three years for statutory obligations. Western Australia to introduce similar legislation, passed in 1997. The For the first time in history, the other states and territories, however, legislation created a ‘meta- did not rush to implement similar regulator’ to work with professional legislation. It took the widespread associations on their integrity and The Hon. John Hannaford, QC, former NSW unavailability and unaffordability of Attorney-General and Minister for Justice 21 years of regulatory innovation through professional standards 13

Australian Securities and Investment when the Minister announced that, “While historically Commission Act 2001. “all Commonwealth departments and authorities would be reviewing professionals As at 30 June 2015, there were the paperwork requirements on have regarded it 19 associations operating 27 the business community with as axiomatic that Professional Standards Schemes, a view to achieving a reduction they meet the collectively covering more than in Commonwealth Government 65,000 professionals in diverse consequences of paperwork”.4 their own mistakes, fields. State and territory professional standards Acts (and their associated In 1985, the Business Regulations the fact is that for limited liability schemes) are Review Unit (BRRU) was set up in many professionals administered by eight Professional the Department of Industry Science insurance is now Standards Councils, pursuant to and Technology to examine “all unavailable or the Intergovernmental Professional forms of regulation whether in the unaffordable to levels Standards Agreement 2005. form of laws, subordinate legislation commensurate with and executive orders which impact Regulatory reform in the 1970s on business”.5 their exposure and and 1980s liability.” The path to better regulation began In 1989, the BRRU was renamed in 1978 when the then Federal the Office of Regulation Reform The Hon. John Hannaford Minister for Industry and Commerce, (ORR) and moved to the Industry QC MLC, the then Attorney- Commission. The ORR covered General and Minister for Justice Phillip Lynch, commissioned an NSW Legislative Council, inter-departmental working group “to developments in regulatory policy Hansard, 14 September 1994, conduct an inquiry into the extent at the Commonwealth level, p 2933 of unnecessary paperwork imposed commented on initiatives in the by government in Australia on small states and territories, and shared 3 information about international professional indemnity insurance business”. developments. following the HIH Insurance collapse in 2001 to spur the rest into action. Regulatory reform in the 1990s The shortage of professional In February 1994, the Council of indemnity insurance resulted in Australian Governments (COAG) professionals pulling out of a number Committee on Regulatory Reform of higher-risk services, causing a reported on key issues relating public outcry. to setting national standards. It covered the development of national The Commonwealth Government Phillip Lynch, former federal Minister standards; a national standards subsequently passed legislation for Industry and Commerce impact assessment process; allowing occupational liability to be The Australian Bureau of Statistics monitoring the appropriateness limited under the Trade Practices made one of the first significant of proposed national standards; Act 1974 (now the Competition attempts to estimate paperwork and procedures to encourage & Consumer Act 2010), the costs, and its working group compliance with national standards. Corporations Act 2000 and the reported to Parliament in 1979 History and evolution 14

On 11 April 1995, COAG endorsed comprising of representatives from In December 2011, the government the public release of a document the business sector to report on announced an independent review entitled Principles and Guidelines measures to reduce the compliance into how well the RIA processes met for National Standard Setting and paperwork burden on small the needs of businesses and the and Regulatory Action (COAG business by 50 per cent. not-for-profit sector. It also looked Principles and Guidelines). This at how the OPBR administered On 12 October 2005, then Prime provided a framework of principles the government’s best-practice Minister John Howard announced for Ministerial Councils and other regulation requirements. the formation of the Taskforce on inter-governmental standard- Reducing Regulatory Burdens on In 2013, the government committed setting bodies that required public Business, which was to report on to boosting productivity, increasing consultation on proposed standards areas where regulatory reform could competitiveness, reducing and the preparation of regulatory make significant immediate gains. unnecessary regulation and lifting impact statements to ensure net regulatory performance. It declared social and economic benefits. The government, which provided it would use two repeal days each its final response to the taskforce’s In 1996, the ORR moved to the year to cut unnecessary and costly report on 15 August 2006, accepted Productivity Commission but legislation and regulation. in full or in part 158 of the 178 continued as an autonomous recommendations. The government The first repeal was held on unit. That same year, the federal also decided that the ORR should be 26 March 2014, the second on government commissioned a Small renamed the Office of Best Practice 22 October 2014 and a third on Business Deregulation Taskforce Regulation (OBPR) and oversee all 18 March 2015. The total net other regulatory quality tools, annual deregulatory savings to date are regulatory plans and regulatory more than $2.1 billion. “A ‘regulate first, performance indicators. ask questions later’ On 14 September 2015, the Today the OBPR administers, professional standards legislative culture appears to monitors and reports on the federal framework celebrated its 21st have developed. Even government and COAG’s regulatory anniversary in NSW and it has not where regulatory impact analysis (RIA) requirements. only survived, but thrived. action is clearly The taskforce’s recommendations The number of professional justified, options and started a new phase of reform, associations being granted design principles with an emphasis on improving schemes continues to grow, as that could lessen the institutions that promote does the number applying for them. compliance costs or good regulation. This comes as no surprise as the professional standards framework side effects appear Then Prime Minister Kevin Rudd, meets all the criteria of the best- to be given little in a first for government, created practice regulation policy. consideration.” a Cabinet portfolio position of Minister for Finance and Australian Government, The Professional Standards Taskforce on Reducing Deregulation in November 2007 Councils Regulatory Burdens on and moved the OBPR from the Each state and territory has an Business, Rethinking Productivity Commission to the Regulation, January 2006, p ii independent statutory body, a Department of Finance. Professional Standards Council, to 21 years of regulatory innovation through professional standards 15

administer the legislation and achieve The PSC is a prime example of References its objectives. Each council has a a meta-regulator that benefits 1 Cardozo CJ in Ultramares Corporation v Touche (1931) 174 NE 441 at 444 chairperson, deputy chairperson its stakeholders. Members of 2 The Hon. John Dowd, AO, QC, and councillors appointed by the occupational associations that Occupational Liability Bill 1990, first reading, Attorneys-General. create endorsed schemes receive 29 November 1990, pp 11564–11568 3 a cap on the cost of their insurance. Rt Hon. Phillip Lynch, MP, Minister for All 11 members of each State or Industry and Commerce, Paperburden The community benefits from better Territory Council are the same Inquiry, press release 86/87, protection and the government 26 November 1978. people. NSW and Victoria nominate 4 Department of Industry and Commerce, gets a meta-regulator that provides two members each, while all other Paperburden Inquiry, press release IC25/80, occupational associations with a 2 March 1980. states and territories and the path to professionalism that removes 5 Moran, A.J., ‘The Business Regulation Commonwealth nominate one. Review Unit’, 13 Canberra Bulletin the need for individual legislation. Members are appointed for up to of Public Administration, 3, 1968, p 283–287 three years and can be reappointed at the end of their term. “There will be Appointments are based on an considerable benefit individual’s skills, qualifications, to consumers from experience and ability to contribute to the work of the council. The NSW choosing to deal with Attorney-General’s Department a professional who provided secretariat support to each is part of a scheme of the councils until 1 July 2015 under the legislation.” when the Professional Standards Chris Hartcher, the then Authority, the regulatory agency NSW Minister for the of the PSC, was transferred to Environment, second reading the NSW Department of Finance, speech, Hansard, Legislative Council, 14 September 1994, Services and Innovation. The agency pp 3636–7 is based in the Sydney CBD.

The councils are not regulators in the usual sense. They are meta-regulatory bodies. That is, they support the self-regulation of occupational groups by their representative bodies. The councils’ statutory functions generally include approving schemes; monitoring occupational standards and risk management; and encouraging and helping improve self-regulation and occupational standards. Present day Capable associations are central to professionalism and effective regulation. The professional associations connected with the Professional Standards Councils (PSC) have evolved and developed over the past 21 years, maintaining professional standards and responding to change and opportunity. Three association CEOs were asked to reflect on that history and the outlook for professional standards and regulation.

The views expressed in this chapter are those of the contributors and are not intended to represent the views of the PSC or its agency. 21 years of regulatory innovation through professional standards 17

New accounting rules for the global economy An interview with Lee White, CEO, Chartered Accountants Australia and New Zealand

Chartered accountancy has “There has been growth in education come a long way as a profession and changes in the way it is over the past 21 years, according delivered and that’s an important to Lee White, CEO of Chartered part of maintaining our relevance Accountants Australia and to our members,” Mr White says. New Zealand. “Our members are also starting to specialise, so it’s necessary for us to The Australian profession has equip them with the tools they need moved to international accounting to be relevant in the services they standards, adapted to stronger deliver, now and in the future.” Lee White regulations, forged a connection with New Zealand, widened its Mr White says the changes over Lee White is CEO of Chartered Accountants Australia and New educational options and embraced the 21-year existence of the Zealand, which is made up of more technological changes. Professional Standards Schemes around 115,000 diverse, talented can be broken into four main International standards arrive and financially astute professionals categories. The first is the impact of One major change for the profession who use their skills every day to technology and its increased use in make a difference for businesses was to ensure Australia was well the delivery of services. the world over. equipped to adopt international accounting standards in 2005. “Technology has allowed business to operate without borders – therefore “We worked hard to prepare our “Regulation can we need to help our members members,” Mr White says. “We engage with business and their always be improved were early adopters and we were clients in ways they previously through better proud of that.” haven’t been able to,” he says. communication, Closer to home, national regulator, “Technology allows a greater which means the the Australian Securities and connectivity not only among our regulators need Investments Commission (ASIC) was members in 104 countries but also given greater powers, particularly in to make sure the between professions. Professionals how it related to auditors. outcomes they seek want information quickly, and are spelt out to avoid “We believe those powers now have technology can do that, but we misunderstanding and reached the right balance, so that as a member organisation play fragmentation.” there is a strong co-regulatory model a fundamental role in helping our of our profession,” Mr White adds. members connect with business.”

Hands across the water Education becomes more flexible Most recently, the association has The second change is in education. been able to bring Australian and “We are an educator and the speed New Zealand members together to at which our members are looking to share experiences and collectively enhance their levels of understanding speak for the public interest. has changed rapidly in that period,” he says. Present day 18

Education is available in much “With each of these changes we “Balancing business and more flexible ways than through have needed to ensure we remain regulation can be a huge the traditional streams and this is relevant and contemporary for our challenge but as business is now bringing diversity and inclusiveness members,” Mr White says. borderless, regulation has to move to the profession, Mr White says. at a pace consistent with how “Importantly, we must also business is moving. He says there is a need for life-long ensure there is a focus on ethical learning options to allow members behaviour and when it is not up “There are also opportunities to to get much greater detail in areas to the standards expected, take tailor a scheme to reflect changes of specialisation. appropriate action to ensure in the way businesses and the overall brand of chartered accountants interact. “More people are also switching accounting maintains its integrity careers to accounting and we are “Regulation can always be improved and quality.” looking at ways we can recognise through better communication, what they have already achieved Focus on regulation which means the regulators in order to bring them into the Regulation remains a big challenge need to make sure the outcomes profession,” he says. for any professional association and they seek are spelt out, to is an area in which Mr White has avoid misunderstanding and The world comes calling a great deal of experience, having fragmentation.” The third change is the globalisation been the chief accountant for ASIC. of business. The association needs He says schemes ensure the public to be able to help members provide “I would look to improve regulation is protected, and that engenders services across borders. by considering the leadership role trust in the accounting profession. Australia and New Zealand have in “We have also seen the impact of the region and ultimately globally,” challenges at a global level affecting he says. policy and regulation in Australia, and a lot of the focus of the profession “When you have many different is around international tax and in structures of regulation, I think it particular whether there is erosion is important that there is a level of of the tax base in Australia by mutual recognition and ultimately multinational companies,” he says. mutual reliance between different forms of regulation. “As our profession becomes a global profession, the synergies “Professional Standards Legislation that come from joining up with is a unique regulatory instrument others is obvious.” and a positive part of that structure of regulation, and there is strong Finally, there has been a big opportunity to profile it globally. change in the demographics of the accounting profession in terms of gender, age and ethnic backgrounds, so the focus has been on being inclusive to all. 21 years of regulatory innovation through professional standards 19

Legal sector faces fundamental changes An interview with Nerida Wallace, CEO, Law Institute of Victoria

Technology is commoditising the law Ms Wallace says. “Implementing new and allowing more competition into regulation is a cost only balanced the market via the internet, which as a potential benefit if all states in is a huge challenge for the legal Australia join the uniform law. profession, Law Institute of Victoria “That’s the real threat to the legal CEO Nerida Wallace says. profession. We have to keep up. “The traditional model was one We have no option. We have to lawyer, one matter, one client, with compete and bring innovation and the lawyer there for the entire life of high professional standards to

Nerida Wallace that matter,” she says. engagement with Asia and to new technology.” Nerida Wallace is CEO of the Law “So ostensibly, a highly qualified, Institute of Victoria, which represents highly paid person applied their Good regulation can be an approximately 19,000 lawyers and attention to all of the detail. You advantage. For instance, the people working in the law in Victoria, don’t need that. You need that Professional Standards Scheme interstate and overseas. level of attention applied only has proved a great marketing tool where it is required.” for lawyers as Ms Wallace says they can point out to clients that they are The solution has been to “unbundle” “Good regulation can protected by a further framework of functions into different groups be an advantage. compensation assurance. of expertise and cost, applying For instance, the the more expensive resources to “People are very happy to have Professional the more difficult functions and that because it gives them a degree Standards Scheme commoditising the rest. Often the of comfort, particularly on very has proved a great commoditising is done elsewhere. complex matters and very large matters,” she says. marketing tool for That change will help lawyers as lawyers as they the sector becomes more Uniform law joins states can point out to competitive, particularly with The Law Institute of Victoria and the clients that they overseas groups moving in that legal profession generally have faced are protected by a operate entirely online. many changes over the 21 years of the Professional Standards Scheme. further framework Increasing competition of compensation Ms Wallace sees key emerging The biggest recent development has assurance.” issues for the legal profession as been the introduction of the uniform the increasing impact of technology, law, which is intended to cover all the introduction of a new uniform lawyers but so far has only been law regulating legal work, and adopted by Victoria and NSW. interaction with Asia. The uniform law was introduced on “The legal profession is a services 1 July 2015 with the objective of industry and that means you are only creating a common legal services as good as your last job,” market nationally. Present day 20

It governs matters such as practising legal system works, including the and because the association lost certificate types and conditions, courts. As a result, there has been the capacity to manage practising maintaining and auditing of trust a recognition that the courts also certificates in 2013. accounts, continuing professional need to start educating self- “In future, lawyers will have to work development requirements, represented litigants. in multidisciplinary networks to complaints handling processes, In fact, education generally has deal with complex problems. They billing arrangements and professional become a big issue, highlighted by may not be working with a firm, but discipline issues. publicity about the large number of they will be in a network that will be In other changes, the Victorian law graduates and concerns about managed by a project manager or Government separated the the job market that will greet them. in a labour hire firm model that will complaints handling mechanism be both exciting and challenging. “There has been an increase in from the state’s Law Institute in They will need to know how to the number of law schools, and 1994, which until that date had obtain the right data. the Chief Justice has expressed been a purely self-regulating body. concerns about that,” Ms “We can also see the emergence of The Law Institute of Victoria (LIV) Wallace says. a new group of paralegals, or non- now provides regulatory services lawyers, who will engage with the to the regulating body, the Legal “What’s being taught in law schools client and bring in lawyers much as Services Board, which is a has also changed. In 2010, the a GP would bring in specialists.” separate entity under the auspices committees that manage what is of the government. taught in law schools and afterwards Some things won’t change in order to work as a lawyer looked Nevertheless, some things will stay In moves to combat ‘bill shock’, at the subjects, with the end result the same. the governing legislation, the Legal that more of the ‘soft’ skills – dealing Practices Act, was altered in 2004 “People will always get into trouble,” with clients, mediating disputes and to improve disclosure on the cost Ms Wallace says. “People will always managing legal practices – are now of litigation and what was likely need a trusted adviser to take them in the curricula.” to happen in that action. These through a process. changes were extended in 2015 Institute moves into new areas “People will always want someone with a simplified process for matters The LIV has also gone from to effectively guide them through under $3,000 and more disclosure being a regulator to being closer a change in circumstance or to required with every change in a to a professional representative move from ‘A’ to ‘B’ in a matter. If mistakes are made, the association and that transition has commercial situation. consequences for lawyers are much not yet fully matured. greater but for consumers, costs “On the back of that there may even It is a not-for-profit organisation and disputes can now be decided by be a growing role for the Professional assists the government in reforming the Legal Services Commissioner Standards Council as people will the law through 1,300 volunteer up to $100,000. more than ever need to be able to experts and 72 committees. It recognise those who are known to still represents 19,000 lawyers, Education options broaden take responsibility for the outcomes, although its 100 per cent coverage Other fundamental changes have and that’s a differentiating factor has dropped to just under come about as people have become between a professional and a 70 per cent because of deregulation more informed about how the non-professional.” 21 years of regulatory innovation through professional standards 21

Engineers take a stand An interview with Stephen Durkin, CEO, Engineers Australia

Having a register of members is an One in two engineers comes important obligation for a profession, from overseas and an expectation of the PSC. “There are many more engineers A register has greater effect if coming into Australia as skilled supported by licensing arms of migrants from all parts of the world,” government. Engineers Australia (EA) Mr Durkin says. had trouble convincing successive “There would have been demand federal governments to support a for about 150,000 engineers in national register of members of the Australia over the past 21 years, profession, so it has decided to go yet our education system produced Stephen Durkin it alone. only about half of those. Almost Stephen Durkin is CEO of Engineers one in two engineers has come Australia, the peak professional “Being the peak body and the from overseas. body for the engineering profession custodian of professional standards, in Australia, which represents some we felt a profound obligation to “At the same time, somewhat 105,000 members. develop a public register of properly ironically, more and more Australian qualified engineers to identify engineers have been moving to work people who subscribed to our code on the world stage. We expect both “We have broadened of ethics and demonstrated an of those trends to continue in the the standards and ongoing commitment to professional near future.” skills of a chartered development,” says EA CEO The shift to private enterprise professional Stephen Durkin. According to Mr Durkin, there has The result is a public register to help engineer to embrace been a major shift in the sectors in users of engineering services check softer skills such which EA members are employed, whether the engineers they want to as communication, with a lot of work traditionally done use are qualified, suitably trained and teamwork and in the government sector moving to up-to-date professionals. leadership.” private enterprise. “We want to reframe the public “For example, 25 years ago there perception of engineers from a were 100,000 engineers working trade image to one of trusted, in all forms of government – state, competent, qualified professionals,” federal and local – and that figure says Mr Durkin. today is less than 20,000,” he says. He says engineering has changed “There’s also been a broader a lot over the 21-year history reshaping of the understanding of the Professional Standards of the value of an engineer. For Schemes, with one of the biggest example, there are more than challenges being the globalisation 100,000 engineers working in of the profession and its increasing sectors other than traditional international orientation. engineering – working in banks, management consulting firms – Present day 22

on account of the unique skills skills in high schools so ultimately something we are looking to learn engineers have in terms of analysing we can have more engineers from and something we can embed problems and managing businesses trained in Australia.” into our organisation in a way and operations. that provides greater protection Becoming the trusted voice for consumers and credibility to Broadening the definition of of the profession engineers,” Mr Durkin says. ‘engineer’ Mr Durkin says the focus has “We have broadened the standards been on modernising EA over and skills of a chartered professional the past few years to have a engineer to embrace softer skills more influential public voice and such as communication, teamwork to connect more effectively with and leadership. industry and employers.

“In fact, we have just initiated a new He says the association’s media college of engineering leadership profile has increased tenfold in a and management to further the couple of years. leadership skills that will help “We have created a new vision Australia move to a high-tech, high- statement for Engineers Australia value, knowledge-based economy.” that has a number of key Growth has come with the changes. components – one being the Twenty five years ago, EA had trusted voice of the profession.” 65,000 members; today there are Mr Durkin says. almost 105,000 and many of those “Second, we are emphasising are in other parts of the world. the leadership role of engineering Bridging the gap between in rethinking infrastructure and education and industry transitioning to a high-tech, high- Mr Durkin says to ensure EA is value, knowledge-based economy. helping set the standards that “Finally we are taking a more define an engineer’s role – not just in international orientation.” Australia but anywhere around the Our members understand the globe – the association has focused benefit of being a member of a on its role as a learned society, with profession recognised by the PSC, a heavy emphasis on education. but there is more we want to do to He says EA is playing a significant increase participation and help them role as a bridge between tertiary understand why it’s important in their education providers and industry. daily practice. “There has been multi-faceted effort “Certainly we are aware of the between government, industry and significant uptake of the Profession the association to really support the Standards Scheme by the legal development of maths and science and accounting professions. It’s 21 years of regulatory innovation through professional standards 23

Public interest and the Professional Standards Legislation

When things go wrong with the advisers we Abbott government Auditors for failed hope are looking after innovation policy on Westpoint venture sidelined our interest, media right track for start-ups and public attention often turns to concerns Layers of rules Auditors put under about professionalism, pressure standards and ethics. Clearly not every public-policy problem should be solved with Auditors have also come under For professions given legislation or government action. closer scrutiny as part of the special status by the wider response to improving In fact, the propensity of successive community or the consumer protection. governments to add layers of rules government, there is has reached a point where reducing In the case against Westpoint often a questioning of unnecessary regulations has property group in 2009, three that status and the become a high priority on the auditors agreed to enforceable rights of that group to national political agenda. undertakings not to practise for self-regulation. up to two years. The liquidation The federal government is The media attention process resulted in a $67.5 million cutting regulation and red tape sometimes magnifies settlement in early 2011 as a result through the Industry Innovation community concerns of a failure to comply with Australian and Competitiveness Agenda it and creates additional Auditing Standards. announced in October 2014 in pressure for regulatory which it promised a lower-cost, The auditor for Allco Finance Group, reform. business-friendly environment. The which collapsed under the weight of The following cases government wants to drive cultural more than $1 billion of debt, agreed are drawn broadly from change to force compliance costs in late 2010 to an enforceable the fields of influence down by better monitoring the undertaking not to practise for nine of the PSC and still only performance of regulators and their months and paid a fine of $10,000 represent a snapshot engagement with business. for failing to comply with Australian Auditing Standards. of occupational sectors. Two “repeal days” a year were introduced to “cut unnecessary and Legislation followed these failures in costly legislation and regulation”. 2012 requiring auditors to file yearly These initiatives aim to save more transparency reports to increase than $700 million a year. the focus on audit quality. The accepted belief is that the better the financial reports, the more confident and informed investors become, and the fairer and more efficient the markets become. Present day 24

ASIC should fight Financial system inquiry means friction online fraud faster between safety, innovation, regulators – report

Consumers bear The PJC Inquiry proposed that the A crackdown on crime existing meta-regulatory function the brunt Criminal and unethical behaviour of the Professional Standards The high-profile failures between was the focus of a joint parliamentary Councils (PSC) be used to help 2005 and 2010 in the financial committee on law enforcement into regulate professional associations services sector brought the finance-related crime that ended in and financial advisers. It suggested issue of controls into sharp September 2015. that the PSC should be the formal focus and elevated the concept base for association recognition in “We need to constantly ensure of professionalism to the reform the sector. This reflects a growing our regulation, law enforcement agenda. interest from governments in the and education methods are A series of collapses featuring PSC model of professionalisation contemporary enough to help financial advisers – Westpoint and meta-regulation. protect Australian consumers,” in 2006 and Opes Prime and deputy chairwoman of the Storm Financial in 2008 – and committee Senator Lisa Singh said. the subsequent huge losses The committee’s report says experienced by retail investors led the Australian Securities and to a series of federal government Investments Commission needs to inquiries focused primarily on ways respond to online financial crimes to improve consumer protection. more quickly and recommends The government also announced more federal funding for identity- the Future of Financial Advice fraud victims and for financial reforms in 2010 to “tackle conflicts literacy education for Indigenous of interest that threatened the communities, which are particularly quality of financial advice” and vulnerable to financial crimes. “the inappropriate selling of A report by global financial services financial products”. firm EY confirms that unethical More inquiries started in 2013 – behaviour in highly regulated the Financial System Inquiry, which industries such as financial services looked at the financial system as a is rising dramatically worldwide. whole, and the PJC (Parliamentary EY’s Fraud Investigation & Dispute Joint Committee) Inquiry, which Services surveyed 3,800 employees considered proposals to lift of large companies in 38 countries. professional, ethical and education Its Top Fraud and Corruption Trends standards in the financial services for 2015 report concludes that: industry, with a focus on the “Regulators are working together competency of financial advisers. across borders like never before to hold companies and their executives to account. Now is the time to reinforce the commitment to driving ethical growth.” 21 years of regulatory innovation through professional standards 25

Victorian training college Building a blitz contracts terminated amid States have ‘less excuse’ to on dodgy private fraud and misconduct snub Uniform Law: NSW A-G building certifiers revelations

Corruption in the Uniform law changes Building sector looks training sector national landscape for changes Three training colleges in Victoria In the legal profession, the uniform A draft report into the NSW Building had their contracts terminated law was introduced on 1 July 2015 Professionals Act 2005 released in 2015 and another four lost to create a national legal services in August 2015 says the key state government funding after a market. Initially it covers just NSW need in the building industry is to crackdown uncovered serious and Victoria. ensure proper accountability and fraud and misconduct. It governs matters such as practising responsibility. The Age newspaper revealed that certificate types and conditions, As such, it recommended some training colleges had been maintaining and auditing of trust developing certification as a taking kickbacks in exchange accounts, continuing professional profession, with its own code, values for helping overseas students development requirements, and culture. “Unlike builders and win Australian visas using fake complaints handling processes, other building practitioners, certifiers qualifications. billing arrangements and professional have a regulatory role and need to An Education Department discipline issues. act in the public interest,” the report investigation identified fraudulent “The days of lawyers, businesses says. “This can be assisted by claims for training that never and consumers wading through creating the ethos and culture of a occurred and unauthorised rivers of red tape to access or profession.” subcontracting of training delivery, deliver legal services are over,” A report by the Architects The Age reported. NSW Attorney-General Gabrielle Accreditation Council of Australia in A further 17 training organisations Upton said. February 2015 entitled Regulation were placed under close watch Victorian Attorney-General, Martin of the Architect Profession within and their funding withheld. Pakula, added that the “reforms Australia – An Overview highlights the issue of multiple regulations. The crackdown was the result offer the prospect of significantly of a government-commissioned reduced interstate barriers, while It says the architecture profession review by Deloitte that identified improving consumer protections is regulated by eight states and substandard training, rorting, and safeguarding an independent territories, with each jurisdiction exploitative marketing practices, legal profession.” having its own architects Act and poor auditing and unsuitably short regulations. The report details the courses. The report found almost similarities and differences without 10 per cent of providers had high making any recommendations. levels of risk. Fragmentation, inconsistency and lack of harmony in regulations, and a variance in risk profiles is common across the built environment professions. Present day 26

Time for a global discussion By Dr Deen Sanders, CEO, Professional Standards Authority

There is growing international Australia should be an active interest in the way professions are participant in this conversation and regulated and many governments our model of Professional Standards are reconsidering their models and Legislation and meta-regulation may the regulatory architecture they use. well offer a great deal to the policy environment. In the UK, the Professional Standards Authority (a meta- In the following pages, two of our regulatory government agency that international colleagues provide first- oversees nine health regulatory hand perspectives on the regulation bodies) has released a report of professions in their jurisdictions entitled Rethinking Regulation, and more detailed accounts of the which questions the current model issues we’ve touched on. and encourages a new ‘right touch’ approach to regulating health services and social care. “Australia should The paper challenges many be an active contemporary assumptions and participant in adds that the current approach is this conversation likely to lead to a vastly complicated and our model and incoherent regulatory system of Professional in which the costs and benefits are Standards unquantified and unclear. Legislation and In the US, the White House has meta-regulation released an executive report on may well offer licensing and regulation as it estimates that 28 per cent of all a great deal American workers are now licensed to the policy and regulated by a board dedicated environment.” to their occupation. This represents a five fold growth in regulation since the 1950s.

At a global level it is time for a much-needed debate on the costs and benefits of different models of regulation, and the benefits of globally developed best-practice standards to deal with the growing trend for borderless professional services. 21 years of regulatory innovation through professional standards 27

The UK landscape is changing By Professor Andy Friedman, CEO, PARN

The professional regulation in science and for various landscape in the UK is complex. In management functions. The Privy part, this reflects the long history of Council, which grants the charter, the largely autonomous development is the formal regulator, although it of the professional body sector. It does not monitor how individual also reflects substantial changes in professionals are regulated. response to pressure for professions Many other professional associations to take, and be seen to take, more self-regulate without a charter. About responsibility for public protection half the professional associations are in cases of professional misconduct Professor Andy Friedman subject to the light meta-regulation and incompetence. of the Charities Commission, which Professor Andy Friedman is the CEO of PARN (Professional Regulation by statute has long been is confined to granting charitable Associations Research Network), in force for some professions. The status with no ongoing monitoring. which he founded in 1998 in Bristol. first statutes for the registration Public protection becomes He is also Professor Emeritus of of professionals date from 1729 more visible Management and Economics in the for solicitors, and from the 19th Department of Management at the Regulation of professionals has century for pharmacists, medical University of Bristol, where he has become visibly more focused on practitioners, dentists, veterinary taught since 1974. public protection since the late 20th surgeons and patent agents. Others century. Geoffrey Millerson found Through PARN, Professor Friedman were added in the 20th century, has carried out research projects only 21 ethical codes from the 160 including for midwives and nurses, and written books on continuing qualifying professional associations architects, opticians and various professional development, he identified in 1964 in his bookThe other health professions. governance, member services, Qualifying Associations: A Study in ethical codes and routes to Professionalization. He said written membership. Focus turns to financial advisers Financial sector regulation focused codes were considered unnecessary Professor Friedman has been primarily on firms until 2012 when or even counterproductive at that widely published in academic independent financial advisers time. “We can still pride ourselves journals, with more than 400 upon knowing instinctively what citations of his work listed. came under the statute-created Financial Conduct Authority. This is ‘done’ or ‘not done’; what is acts as a meta-regulator to accredit ‘cricket’ or ‘not cricket’,” he wrote professional associations that, in (p 160). Now almost all professional turn, help independent financial associations have their own codes advisers attain and maintain the or require members to adhere to the requirements for a Statement of code of another professional body. Professional Standing. The content of professional codes Regulation for other professions, has changed significantly. In the such as engineering, is done through 1960s, codes were concerned most Royal Charters and there also are commonly with restricting advertising chartered professional associations and with members poaching clients Present day 28

from each other. I, and others, did an Act of parliament of 1997 and coming to resemble that of not find restrictions of that nature in the General Teaching Council for professional associations. In this 2005. Codes now focus more on England by an Act of 1998. they are beginning to compete with honesty, integrity and trustworthiness professional associations, particularly Others include the General Social in dealing with clients as well as over continuing professional Care Council (2000); Nursing and general social obligations, such development support services. The Midwifery Council (2001); Health as those relating to safety and current conservative government Professions Council (2002); Council the environment. seems set to continue moving away for Healthcare Regulatory Excellence from the Labour government’s The sea change in codes is now (a meta-regulator for healthcare policies, which may lead regulatory being matched by an enhanced regulatory bodies, 2002); Solicitors bodies to resemble professional transparency in disciplinary Regulation Authority and the Legal associations further in future. procedures. Millerson referred to a Services Board (2007); and the lack of publicity given to findings. General Pharmaceutical Council, “Frequently, associations merely which was separated from the Royal publish a brief passing reference to Pharmaceutical Society of Great the occurrence in the journal, almost Britain (2008). hidden away in a corner … no However, the coalition government References association is anxious to expose a of 2010 withdrew substantially Friedman A., Daly S. and Andrzejewska R., grave matter to a wide audience,” Analysing Ethical Codes of UK Professional from regulatory activities as part of Bodies, PARN: Bristol, 2005. he wrote in The Qualifying general cutbacks as well as being Millerson G., The Qualifying Associations: Associations (p 175). more sympathetic to self-regulation. A Study in Professionalization, Routledge & Kegan Paul: London, 1964. Now findings are made public The General Teaching Council for PARN, Financial Benchmarking for through websites. In some cases England was abolished in 2012. Professional Bodies, PARN: Bristol, the progress of disciplinary cases is Funding for other regulatory bodies (various years). PARN, Shifting the Boundaries of made public as well as the rationale has been cut. Good Practice, PARN: Bristol, 2014. for the findings, PARN found in 2014. PARN’s professional body financial Many associations also hold their benchmarking surveys show a hearings in public. Both professional dramatic fall in government funding associations and regulatory bodies and grants from more than have become more transparent. 50 per cent on average in 2009 Government policies swing to only 33 per cent in 2014. This The picture is complicated further by has been recovered mostly by a 21st century changes to government rise in income from research and policies towards professional consultancy, business development regulation. Labour governments and special projects, as well as between 1997 and 2010 enacted from publications. legislation to set up independent Regulatory bodies are becoming regulatory bodies. The Architects more commercial in their activities Registration Board was set up by and their income sources are 21 years of regulatory innovation through professional standards 29

The US looks to reform its licensing system

Despite projecting images of being About two-thirds of this change full advantage of all of America’s the land of the free, the actual stems from an increase in the talented labour,” it says. picture of professional regulation number of professions that require “When designed and implemented in the US is complex and often a licence, with the remaining carefully, occupational licensing can onerous. growth coming from the changing offer important health and safety composition of the workforce. There are nearly as many different protections to consumers, as well licensing systems across the 50 “By one estimate, licensing as benefits to workers.” states for each occupation, with a restrictions cost millions of jobs Differences between states myriad of licensing and regulatory nationwide and raise consumer The report also includes input boards overseeing each occupation expenses by more than from the Council on Licensure, and affecting the portability of US$100 billion,” the report says. Enforcement and Regulation professionals across the country. “The stakes involved are high, and (CLEAR), which promotes regulatory The issue is coming to a head, to help our economy grow to its full excellence through networking, with the US Government recently potential we need to create a 21st publications, and research services releasing a report that advocates century regulatory system – one for those involved with, or affected reform of occupational licensing to a that protects public health and by, professional and occupational system that better balances public welfare while promoting economic regulation. welfare and economic growth. growth, innovation, competition, “The most recent CLEAR estimates and job creation.” The 2015 report, prepared by the suggest that fewer than 60 Department of the Treasury Office A framework for reform occupations are licensed, certified, of Economic Policy, the Council The report, released for discussion or registered in all states, of Economic Advisers, and the in July 2015, examines the costs compared with 1,100 occupations Department of Labor – entitled and benefits of licensing, discusses regulated overall, which shows Occupational Licensing: A the growth of licensing and the substantial differences in which framework for policymakers – evolving marketplace, and provides occupations states choose to recognises the benefits to workers a framework for reform. regulate,” says CLEAR Executive and consumers of a properly Director Adam Parfitt. It cautions policymakers to designed and implemented “protect consumers without “The likely factors contributing to occupational licensing regime. placing unnecessary restrictions on expansion of licensing across fields More than one-quarter of US employment, innovation, or access include a general trend towards workers now require a license to do to important goods and services”. professionalisation and greater their jobs, with most licensed by the training, the political influence of “For the economy to successfully states, the report says. The share of organised constituencies and the continue to innovate and grow, we workers licensed at the state level fact that licensing boards are often must ensure that we are able to take has risen fivefold since the 1950s. revenue-neutral or even revenue- generating,” Mr Parfitt says. Present day 30

The share of licensed workers varies “On the plus side, it communicates “The most recent widely state by state, ranging from a to potential customers that there is CLEAR estimates low of 12 per cent in South Carolina quality of service and protects public suggest that fewer to a high of 33 per cent in Iowa. health and safety. Most of these differences are due than 60 occupations “For workers, the professionalisation to state policies, not differences in are licensed, certified, that accompanies licensing can occupation mixes. or registered provide a quality career path and in all states, States also have very different encourage continuing education. licensing requirements in the compared with “But it can also increase the costs details of required coursework, of services. In nine of the 11 studies 1,100 occupations requirements for continuing we reviewed, stricter licensing led to regulated overall, education, the extent of reciprocity, higher prices, with effects ranging which shows and the treatment of prior behaviour from 3 per cent to 16 per cent.” substantial such as justice system interactions differences in which and loan repayment. Best results for all The Occupational Licensing report occupations states More regulatory hurdles says licensing can help ensure high- choose to regulate.” That’s not the only regulatory hurdle. quality services, safeguard against Licensed workers sometimes are Adam Parfitt serious harms, and offer workers EXECUTIVE DIRECTOR, CLEAR unable to use distance or online clear guidelines around professional education to fulfil continuing development and training. education requirements, as some states do not automatically accept It says best practices in licensing accreditation from good schools can allow states, working together based in other states. or individually, to safeguard the wellbeing of consumers while Similarly, workers are able to work maintaining a modernised regulatory remotely in many licensed fields, system that meets the needs of including legal occupations workers and businesses. (70 per cent), social service (45 per cent), and education and Some of the best practices the health (both nearly 20 per cent). report highlights include: But licensing restrictions on cross- • Limiting licensing requirements state practice inhibit the potential to those that address legitimate for remote work. public health and safety concerns to ease the burden of licensing “Licensing entails benefits and costs on workers to the general population that should be weighed carefully,” according to Mr Parfitt. 21 years of regulatory innovation through professional standards 31

• Applying the results of comprehensive cost–benefit assessments of licensing laws to reduce the number of unnecessary or overly restrictive licences • Harmonising regulatory requirements within groups of states as much as possible, and, where appropriate, entering into interstate compacts that recognise licences from other states to increase the mobility of skilled workers • Allowing practitioners to offer services to the full extent of their current competency to ensure all qualified workers are able to offer services.

“Instituting a more rational approach to occupational regulation would improve economic opportunity and allow American workers to take advantage of new developments in today’s economy,” the Occupational Licensing report concludes. Future outlook Professions have adapted through cycles of economic, social and technological change while regulation has evolved in response to community needs and policy priorities. In this section, three noted observers of professions were asked to gauge the current drivers of change and offer their thoughts on the future.

The views expressed in this chapter are those of the contributors and are not intended to represent the views of the Professional Standards Councils or their agency. 21 years of regulatory innovation through professional standards 33

Professions will always have a role By Dr Simon Longstaff, Executive Director, The Ethics Centre

The professions have always Creeping commercialisation been distinguished from other The compelling logic that led to the occupational associations, such as establishment of the professions is guilds, by their conscious rejection now being challenged at its roots, of two fundamental tenets of ‘the partly by a progressive movement market’. to ‘commercialise’ all aspects of society, including the professions. First, while market participants are This is a long-established tendency. encouraged to pursue self-interest (in the belief that an ‘invisible hand’ I recall the moment, when

Dr Simon Longstaff, AO will ensure an increase in the stock discussing professional obligations EXECUTIVE DIRECTOR, of common good), members of with a group of lawyers some 20 THE ETHICS CENTRE the professions are required to years ago, that they declared that Simon’s distinguished career subordinate self-interest in favour of rather than be bound by such includes being named among the discharging duties owed to others. obligations they instead would run AFR Boss True Leaders for the 21st a ‘business in the law’. That is, century, with busineswoman Carol Second, while market participants they would offer legal services as a Schwartz noting “… I don’t know need do no more than satisfy commodity just as a plumber might one CEO or chairman in corporate the wants of their customers, offer plumbing services, or an IT Australia who has not worked with professionals are bound to identify consultant IT services. Simon Longstaff”. Simon has a PhD and serve the interests of their in Philosophy from Cambridge. clients and the public good. I pointed out that such a move Prior to becoming the inaugural would lead society to withdraw In theory, these ethical restraints Executive Director of The Ethics whatever privileges remained for Centre in 1991, he worked in the should impose a material burden on lawyers. They thought this would Northern Territory in the Safety professionals. However, recognising be no great loss compared with the Department of BHP subsidiary, the social good that communities commercial advantages on offer. GEMCO, lectured at Cambridge derive from people who take up University and consulted to the professional commitments, ‘social Since then, I have seen the Cambridge Commonwealth and compacts’ have been instituted to same tendency at work in other Overseas Trusts. compensate professionals for setting professions, where it is now not Simon was inaugural President aside their pursuit of self-interest. uncommon to find people running of The Australian Association for a ‘business in accountancy’, a Professional & Applied Ethics and For example, traditionally society ‘business in engineering’, and so on. is a Fellow of the World Economic has reserved certain areas of work Forum. He is Chairman of the exclusively for members of each The rise of expert systems International Advisory Board of the profession – and often has accorded The other great change to the Genographic Project and Deputy high status to those with the professions arises from the Chairman of the Global Reporting knowledge, skills and disposition to Initiative Board. He also serves on a development of ‘expert systems’ take up a life of professional service. number of Boards and Committees – most notably through the use across a broad spectrum of Or so it used to be … of artificial intelligence capable of activities in Australia. interrogating vast datasets. Future outlook 34

We tend to think that technological I think members of the professions “The ethical disruption will mostly affect low- will secure their future by developing foundations of the skilled workers. However, it a profile that is equivalent to that professions were looks likely that computers will of artisans. This may seem an odd sound when originally displace the technical abilities of comparison but it is notable that many skilled professionals. For in the face of competition from developed. I believe example, machines can analyse low-cost, mass production, many there are good samples, review the findings against people are carving out lucrative jobs reasons to preserve databases of confirmed results and producing high-value, hand-made them today – and for make diagnoses. items for which people will pay a the future.” premium. Similarly, expert systems will be

Dr Simon Longstaff, AO able to maintain an up-to-date The equivalent of this, in the EXECUTIVE DIRECTOR, knowledge of the law and provide professions, will be the individual THE ETHICS CENTRE real-time validation of data on (often in partnership with others) which financial and sustainability who brings a distinctive human accounting depends. touch to their practice. The desirable attributes will include creativity, Of course, there will still be a place a capacity for empathy and for the human interface – someone compassion, and perhaps most to offer counsel and support – importantly, practical wisdom. however, expertise is likely to move away from the professional to the I’m not suggesting that members system. Inevitably, this will alter of the professions will all need to the status of those who choose to be saintly characters. That is not a belong to a profession. requirement of ethics. What will be needed is people who operate as Ethics a key differentiator ‘reflective practitioners’ and who The one area in which members offer something not provided by the of the professions may have an ‘algorithms of the market’. Which indisputable advantage is ethics. brings me back to where I began. Machines are unlikely ever to have a The ethical foundations of the true ethical sense – in part because professions were sound when ethical dilemmas, in principle, are originally developed. I believe there unresolvable (at least when values are good reasons to preserve them and principles of equal weight are in today – and for the future. conflict). In such cases, judgement based on perceptive understanding Dr Simon Longstaff, AO, is Executive Director is demanded – and this only comes of The Ethics Centre – www.ethics.org.au. with experience. He was a founding member of the PSC. 21 years of regulatory innovation through professional standards 35

Skill shock: The critical role of professional associations By Dr Marcus Bowles, Chair, The Institute For Working Futures Pty Ltd

Professions are in a better position global transport networks and than most occupations to confront broadband infrastructure. However, the impending skills shock. The the professions will experience the increasing emphasis on new greatest disruptions as different skill skills to complement technical mixes and the impending surge of expertise provides agile and ‘machine learning’ and automated adaptable professionals with better knowledge services materialise. employment opportunities. In the Importance of associations absence of coordinated structural The challenge of responding to the reforms to address a future skills Dr Marcus Bowles skills shock and the reskilling task shock, professional associations, CHAIR, THE INSTITUTE FOR will prove the critical importance of WORKING FUTURES PTY LTD with their expertise and specialist professional associations. Twenty Marcus researches and consults on skills, are well positioned to reinforce years of data on the restructuring the future of work and learning; the their importance as accreditation of work and skills in S&P/ASX 50 design of agile organisations; leadership bodies and to play a vital role in organisations clearly shows that capabilities; rethinking development and helping their members adapt to the the ability of public and private recognition of professional standards challenges of changing workplaces. and experience; and using technology organisations to be agile and to promote innovative development. Jobs will evolve competitive in a global marketplace Marcus mixes consultancy with The impact of what economists term relies on their access to professional academic expertise, drawing on ‘structural reform’ is best seen in the skills. But the mix of skills they corporate engagements, professor-level loss of unskilled and non-specialist demand has evolved. appointments and as an entrepreneur manufacturing jobs. Unlike previous Compared with professional who has won international awards eras of boom and bust, the demand (full CV at http://marcbowles.com). jobs at the same levels just five for these jobs hasn’t been elastic. years ago, the most noteworthy, Once they disappear, usually they do common changes to skills profiles not return. “Associations will include more complex roles and But professions have had relatively responsibilities at all levels; an need to co-operate to strong career opportunities bolstered increase in the cognitive skills deliver and nationally by population and economic growth, professionals need to climb the recognise the soft and been buffered from downturns career ladder; and the growing value skills that enhance because they perform high-value sophisticated employers place on how all professionals activities required by many industries emotional judgement, identity and transfer their expertise (for example, nearly 60 per cent of behavioural and other intangible to new, complex and ICT workers are employed outside attributes. The mix of professional uncertain operating the ICT industry). and technical skills in post-trade (diploma and above) job profiles environments.” In addition, those with specialist will be pushed below 50 per cent skills or high value–adding Dr Marcus Bowles – which has already happened in knowledge work using intensive CHAIR, THE INSTITUTE FOR transformational organisations. WORKING FUTURES PTY LTD ‘fly-in, fly-out’ modes or they telecommute thanks to improved Future outlook 36

Skills will be mixed Keeping credentials high occupational boundaries. Some The shift reflects professionals’ Counter-intuitively this re-emphasises incumbent associations will grow capacity to use their expertise the importance of professional rapidly as they embrace disruption in more complex and uncertain associations. As formal educational and respond to demand. Most will contexts. Job profiles increasingly providers supply large, ‘chunky’ have to embrace the very technology demand technological, leadership, qualifications that emphasise that is driving change. and transferable skills, or so-called knowledge transfer and have Associations inevitably will need to soft skills, that transcend any one only limited capacity to teach use technology to meet expectations profession (for example, problem applied experience, so the as professionals seek to access solving, critical thinking, teamwork, professionals, employers and the right skills from anywhere in the communication, ethics, emotional governments will demand new world in time-sensitive, continually judgement). What constitutes a ‘skills models, bringing disruption. updated small packages. mix’ is also changing. For example: As demand expands, professional The changing landscape Short term – for a fixed, context- associations will have to supply Workplaces are changing rapidly specific purpose or a project-based and recognise experience-based as new technologies and radical use-by date (for example, a merger continuing professional development business models are developed. relationship financial auditor) (CPD) programs that target broad Digital technologies are also Amalgamated – drawing together or specialist skills while seamlessly disrupting how professionals sell and consolidating distinct skills into enhancing the soft skills a and supply labour. Associations will a new job (for example, a Six Sigma professional needs to be effective. use disruptive and innovative ways process engineer and distribution The associations are able to design to develop and recognise the skills manager into a distribution centre and recognise ‘micro-credentials’ of professionals and young people re-engineering manager) and ‘stackable’ credentials tied to seeking professional careers as Hybridised – meshing of distinct ‘bite-sized’ CPD programs that will employers demand more contextual skills and expertise to form a new create the skills to meet short- relevance and cross-disciplinary professional category (for example, term needs or that a professional mixes than the education system a personal finance advocate in needs to have amalgamated with, can supply. which online customer service and hybridised within, or grafted onto financial adviser roles are combined their expertise. to personalise outcomes) Associations will need to co-operate Grafted – in which expertise from to deliver and nationally recognise emerging bodies of knowledge or the soft skills that enhance how all areas outside the organisation are professionals transfer their expertise ‘grafted’ onto a more traditional to new, complex and uncertain role (for example, expertise in operating environments. nanotechnologies is grafted onto a New professional associations traditional medical diagnostic and will emerge, or form through treatment job to create a medical consolidation, in fields in which biotech diagnostic technician). disruption has obliterated traditional 21 years of regulatory innovation through professional standards 37

Digital disruption in professional services delivery By Dr George Beaton, Beaton Research + Consulting

Will digital technologies replace or the probable future will encompass enhance the work of professional both replacement and enhancement. practitioners? From this threshold I have termed this scenario of question and the range of possible constant change and unpredictable answers flow others. movement the ‘kaleidoscope’.

If the trend is to replacement, at The professions and their institutions what rate will this occur? Who will are not well prepared for the own the substitutes – registered challenges and benefits of what’s professionals or others? How will now rapidly becoming reality in the

George Beaton, MBBCh, MA, PhD the substitutes be regulated, if at all? delivery of services. How will the remaining (surviving?) BEATON RESEARCH + CONSULTING On balance, the exponential traditional practitioners organise Dr George Beaton has held senior accretion of knowledge and its themselves and price their services? academic positions in the medical, application through technology are business and law faculties of the How will these practitioners better for clients and the public University of the Witwatersrand, cope with the ensuing loss of interest than the traditional ways of South Africa, and the University of jobs to technological alternatives Melbourne, Australia. He is regarded operating and this progress should (technological unemployment)? as a leading independent authority not be blocked by the interests of How are educators, regulators and on professional services industries professions. and their firms. professional associations preparing? Combinations of design thinking, On the other hand, if the trend His research interest is in the systems engineering, negotiation is (to continue) to enhance the imperative for law firms to remake theory, artificial intelligence, their business models, a subject he productivity of practitioners, will the visualisation, and professional covered in his books NewLaw New regulatory environment continue knowledge and skills (to name a few Rules in 2013, and Remaking Law to try to ‘enclose’ (i.e. protect) the Firms – Why and How, which he disciplines) are being blended into professions and maintain their co-authored with Dr Imme Kaschner ‘new-to-the-world’ ways of meeting regulated monopolies? Will society and which will be published by the clients’ needs in better, faster and permit this? How will the enclosed American Bar Association in early cheaper ways. 2016. professions (and their regulators) withstand the digital revolution, Technology replacing George is a partner at Beaton particularly cognitive computing, practitioners Capital and Chairman of Beaton Online dispute resolution without any Research + Consulting, where he and the online elimination of consults to professional services boundaries, other than through human agency, pioneered by eBay, firms in Australia, Asia, the UK, the notional jurisdictional restrictions? is being expanded in many ways. US and Canada. Xero and other software developers Looking through the are providing fully automated tax kaleidoscope returns. IBM’s Watson is delivering Contemporary authorities and medical diagnoses that in some commentators agree that the cases are superior to those of teams answer to the threshold question is of leading physicians. unknowable. They also agree that Future outlook 38

Lex Machina contributes to greater Technology enhancing “The professions accuracy in predicting success in productivity have an opportunity, patent litigation at a fraction of the Technology that enhances the productivity of professionals has indeed a duty, cost and time of lawyers doing the been used for decades: word to adapt and same tasks. Drones are used for geotechnical surveys, and some processors, email, document take leadership invasive medical procedures by management, computer-aided positions in both robots may prove in time to deliver design, automated measurement responding to and better results than surgeons. of bodily functions, and shaping the future spreadsheets, for example. No regulated profession is immune of the sociological, from parts of its work being replaced A shrinking range of work will technological and by machines. accompany technological philosophical ways enhancement for traditional The consequences include professionals. As technology works in which professional technological unemployment better, faster and more cheaply, services are and an abundance of new roles, fewer professionals will be needed delivered.” careers and professions. Perhaps for the same output and they will be latent demand will increase the George Beaton able to work anywhere, at any time, (redefined?) professions’ share of MBBCh, MA, PhD with enriched intellectual challenges BEATON RESEARCH + the work created by previously and better results for their clients. CONSULTING undetected and unmet needs. But will the ‘innovator’s dilemma’ of a This has profound implications choice between adding features or for the organisations several maintaining a product to improve professions have built, some of it, prevent traditional professions which are multinational and much grasping the opportunity? larger than many of their clients. Professional enterprises will get The full impact of the replacement larger through further consolidation, aspect will be incremental rather though the new technologies also than transformational and abrupt. allow fragmentation and a return to Perhaps it will take 10 to 20 years. cottage industries. Therefore, it is more important for students, educators and regulators The public good will benefit than for established practitioners. Or The only option is to prepare for is it? The iPhone had a huge impact a world involving replacement on whole industries apparently and enhancement. In many ways unrelated to the telephone, to this world is already here – it’s say nothing of the millions of jobs just not very evenly distributed, created in new areas, such as app as novelist William Gibson is development. reputed to have put it. 21 years of regulatory innovation through professional standards 39

This is a challenge for all professions, Sources practitioners and enterprises Beaton, G., Why professionalism is still relevant today, 2010 (personal essay) that have been shielded from full Beaton, G. and Kaschner, I., Remaking market forces. Visionary leadership Law Firms – Why and How, American Bar is required from professional Association Publishing, 2016. associations, educational institutions, Christensen, C., The Innovator’s Dilemma: When New Technologies Cause Great Firms regulators and, not least, the to Fail, HarperCollins, 1997. practitioners themselves. Where Gibson, W., Neuromancer, Penguin Putnam, 1984. enclosure is no more than veiled Moorhead, R., Chair of Law and Professional self-interest, it must be left behind. Ethics, Inaugural Lecture, Precarious Deep change based on the benefits Professionalism, University College London Faculty of Laws, 2014. of the digital revolution must and can Susskind, R., and Susskind, D., be embraced. The Future of the Professions, Oxford University Press, 2015. The professions have an opportunity, Carr-Saunders, A.M., and Wilson, P.A., The indeed a duty, to adapt and Professions, Oxford University Press, 1933. take leadership positions in both responding to and shaping the future of the sociological, technological and philosophical ways in which professional services are delivered. Adding a profession’s cognitive, affective, manual and moral capabilities to the abilities of machines will benefit clients and the public greatly.

In the final analysis, this is a moral issue about access and equity for individuals and the public good. Enclosure – albeit originally well- intentioned – has characterised the professions from their beginnings. Now technology is challenging this, and enclosure may well be eliminated, or at the very least much reduced, in the next decade. Future outlook 40

The future looks bright By Dr Deen Sanders, CEO, Professional Standards Authority

A general pessimism has appeared deserved. A range of complex over the past several decades about attitudes on social, market, the capacity of and interest among technological, ethical, government, professions to act as self-regulatory regulatory and even personal communities with a focus on issues has affected the progress of consumer protection. professionalism over the past 21 years. It is certainly reasonable to This also reflects a shift in the conclude that genuine self-regulation way government responds to requires both community and community and consumer risk and, government trust in institutions that Dr Deen Sanders subsequently, the way consumer has not emerged naturally. CEO, PROFESSIONAL protection is designed. ‘Regulation’, STANDARDS AUTHORITY as it is currently framed, is typically While that might indicate a flaw in Dr Sanders is a specialist in the field seen as a tool of compliance the design of PSL, I believe it instead of professions, with a background designed to punish or discourage encourages optimism about the in regulation, financial services, law and education. He has had extensive poor behaviour. In this context, when possibility of achieving that goal. experience with association leadership things go wrong for consumers or With changing community and and professionalisation projects, and the community, the government government attitudes about the implementing large-scale, regulatory- response is protective – regulate social, financial and technological led industry change programs. more and require higher standards, aspects of regulation and a Dr Sanders has a global and domestic more education or more controls. recognition that ‘more regulation’ profile in academic leadership on These approaches typically translate does not automatically translate professionalisation and has advised to a greater compliance burden. to improved consumer outcomes, on global regulatory task forces for there is also a clear change in professional standards. His academic The first version of Professional the expectations we have of and professional interests are now Standards Legislation (PSL) was professionals, experts and the focused on the nature of regulation for enacted 21 years ago at a time institutions in which we want to improved consumer protection and when policymakers wanted to how professions can play a positive place our trust. It may yet prove protect consumers by improving role in bettering society. professional standards, and maintain strong professional “This is clearly governance that would ensure compensation if things went wrong. a global as well It was a model of meta-regulatory as domestic legislation designed to measure conversation and a and oversee an occupational source of pride that association’s (a profession’s) Australia has led capacity for self-regulation. with a policy Most would argue that the promise framework and of independent self-regulation has legislative solution.” not been delivered and is not yet 21 years of regulatory innovation through professional standards 41

possible that new commitments to We think there is an opportunity to professional behaviour will emerge initiate a new policy conversation “There is growing to deliver protection and benefit to about the role and design of interest in better consumers. regulation that could lead to new professional concepts of partnerships between As Australia’s expert regulatory regulation across regulators and the regulated – a agency in professional standards, the globe, with wide platform of better regulation. the Professional Standards Authority government interest (PSA) is also a research and In our view, better regulation is in encouraging innovation agency that provides about using regulatory design higher obligations support to government, industry elements to encourage participants and professionalising occupations. to respond to obligations using on individuals tools that focus on quality and who engage with In fact, the research and policy professional identity, rather than consumers.” formulation expertise of the PSA traditional elements of control and is recognised internationally. In government engines of compliance. 2014, it was awarded the lead We look forward to seeing the PSL agency role in a multi-research The program act as a catalyst for improvements team (including Harvard University, At this stage, our future work in regulatory design, to better align the University of NSW, Griffith program in this area includes a the resources of government with University and the University of planned series of discussion papers those of the professions and deliver Technology, Sydney) that administers and potentially conferences that economic, community, personal and an Australian Research Council will act as central launch points for consumer protection benefits. grant to investigate professions and the policy programs underway in a professional standards as a model number of government areas. The next 21 years look even more of regulation. exciting than the last. The future looks bright There is growing interest in better While this publication looks back professional regulation across the and celebrates 21 years of PSL, the globe, with wide government interest future looks just as bright because in encouraging higher obligations there is growing interest in how the on individuals who engage with model of meta-regulation may be consumers. This applies to all applied to other environments and occupations and is a growing trend occupational and industry settings to across domestic and international encourage better community-aligned governments. outcomes. We are acutely aware that the This is clearly a global as well as challenge for government is to domestic conversation and a create regulatory systems that source of pride that Australia has protect consumers, improve the led with a policy framework and behaviour of professionals and legislative solution. encourage growth rather than stifling it. Future outlook 42

Grants program encourages new thinking

The Professional The PSC foster research into projects have included the Standards Councils improving professional standards development of small-practice (PSC) take a three- and self-regulatory capacity of quality and risk management tools, pronged approach to occupational associations. Since professional assessment systems thought leadership. 2011 we have done this through and practical tools to address risks They foster theoretical a comprehensive grants program of practitioner stress and personal and principle- made available to regulated issues affecting professional service. driven research into associations that has now awarded professional standards A total of $182,000 was awarded in more than $1 million to support and regulation. They professional standards grants during improvements in standards. encourage efforts to 2014–15 for three new projects. implement research at The PSC offer two types of grant Support for essential research a practical level, and programs – professional standards The research grants program started they support programs grants and research grants. To date, in 2013 with the aim of encouraging to assist professionals. 12 projects have been completed, and rewarding innovative research Here we profile two key 10 funded by professional standards that develops community confidence programs in this strategy grants and two by research grants. – a major Australian and trust in professions in Australia. Research Council Support for associations It offers funding for academic and Linkage project, which Professional standards grants professional services researchers to provides government (formerly ‘star grants’) have been undertake evidence-based studies support for research, offered since 2010 to associations into improving and advancing and the councils’ grants participating in Professional professional standards. program. Standards Schemes. The Councils Research may be directed to consider grant applications in the areas such as regulatory design areas of ethics, codes of practice, and ethics through to professional risk management, complaints and integrity systems and competency discipline, professional development frameworks. A total of $136,700 was and quality assurance. awarded in research grants during Favoured projects are those that are 2014–15 for two new projects. practical, can improve professional Building trust in professions standards, involve collaboration The councils aim to work with between associations and can apply associations to identify and address across professions. shortcomings in areas in which Successful applicants will meet an consumers may be vulnerable. For identified professional standards example, sole practitioners and need, improve consumer protection small practices may have particular or facilitate improvements in needs for support, and issues such occupational standards. Funded as practitioner mental health and 21 years of regulatory innovation through professional standards 43

wellbeing may have a particular A profession needs to identify and The councils help associations to impact on the consumers of address its vulnerabilities to maintain implement research and develop professional services. the confidence of policymakers and tools through the grants program the public. to encourage the continuous improvement of professional standards. Professional Standards Grants* Awarded Project Association Description of project Funding awarded

2011 Professional Credentialising The Victorian Bar Provide a CPD training program for $38,000 for Indictable Crime junior criminal law barristers. 2011 Public Policy Quality Assurance Institute of Public Accountants Migrate quality assurance questionaires $70,000 from paper to online format. 2011 Prevention of Elder Abuse Law Institute of Victoria – Develop a CPD training program for $42,830 Medico-Legal Training Australia lawyers in regional Victoria. 2011 Risk Management for Independent Professional – Develop a risk management resource $5,000 Accountants member of CPA for accountants. 2012 Public Policy Quality Assurance Institute of Public Accountants Expand online questionaire to include $70,000 SMSF auditors and financial planners. 2012 Practice Health Check Queensland Law Society Develop an online tool to help $31,000 members assess practice management. 2012 Online Training for Non- Professional Surveyors Train non-professional staff in support $25,000 professional Field Assistants Occupational Association roles to overcome critical shortage of surveyors. 2012 Risk Management Tool for Institute of Chartered A tool to assist members of small $80,000 small to medium accounting Accountants (now Chartered to mid-sized practices implement practices Accountants Australia New a risk framework in line with a new Zealand) professional standard set by APESB. 2013 Practice Resillience and Queensland Law Society Practical tools to assist Qld solicitors $20,000 Wellbeing improve wellbeing and reduce the number of claims and complaints. 2013 Practice Review for small Law Society of South Australia Assist small legal firms in SA with $61,800 law firms risk management.

Research Grants* Awarded Project Grant Recipient Description of project Funding awarded

2013 Professional Standards for Monash University & SOCAP Developed a competency and ethical $55,000 Complaints Managers and framework for complaint professionals Handlers in Australia, and a complaints toolkit to assist complaint managers and handlers. 2013 Assessing Australia’s approach Creative Consequences Examines the history of Professional $40,000 to professions: a creative Standards Legislation, and evaluates solution to a persistent problem PSL as a regulatory regime.

*Completed projects only. Does not include projects that are ongoing or have been withdrawn. Future outlook 44

Professions in the age of regulation By Professor Dimity Kingsford Smith, Professor, UNSW Law

The current mood suggests that In addition, we are researching business requires, or seems to indicators of the value of require, a boost of professionalism1 professionalising that may help to respond to a perceived malaise identify ways to improve professional in client care and trust. This mistrust standards and protect consumers. gives rise to a central question: how Finally, researchers are working with can professionalising an occupation the PSC on a handbook for existing raise standards of conduct, and aspiring professions that will be competence and ethics? an information source and practical guide to professionalism and its Professor Dimity Kingsford Smith Professions and aspiring continuous improvement. UNSW LAW professions are set in regimes that Dimity Kingsford Smith teaches and mix professional or associational Challenges to professions researches in the areas of regulatory regulation (or self-regulation) and Our first project asks what are theory and policy, corporations and legislation, exemplified by the the 21st century challenges securities regulation, and corporate Professional Standards Councils to professions? Professionals governance. She has had research (PSC) and its schemes. grants in the areas of superannuation working in large firms find their values challenged when the ‘client regulation, online investing and Current research first’ demand may be justified by concepts of fairness that she has A number of projects that focus on applied to financial regulation. She is managerial efficiency, not by fidelity professions are under way as part a member of the External Advisory or care. Stellar remuneration and of an Australian Research Council Panel of ASIC and of the Code professional values detached Committee of the New Zealand grant funded by the Commonwealth from their local context because Financial Markets Authority. She was government and the PSC. Led by of globalisation also present the inaugural independent Chair of the University of NSW, one maps challenges. We offer practical the Conduct Review Commission, a professional regulation models responses to these challenges, professional disciplinary panel in the across the globe and incorporates financial services industry, from 2007 informed by wider research. The aim the approach taken by the PSC and to 2014. She is also the Customer is to provide strategies to respond another examines the challenges Advocate in NAB Wealth’s customer to Robert Merton’s finding that many remediation program for financial facing professions – and the PSC professionals observe ‘an ethical advisory customers. in supervising schemes – such as sense of limited responsibility’.2 employment, remuneration and References globalisation. Regulation models 1 Rogers, Kingsford Smith, Clarke and A further project explores The second project analyses Chellew, ‘What Does the Concept of Profession Have to Offer in the Twenty- professional indemnity insurance as professional regulation models, first Century?’ paper delivered at ARC an effective regulatory mechanism including Australia’s PSC, and Linkage Professionalism Roundtable 6, August 2015 (text on file with author). and also considers whether the considers the roles of individual 2 Merton, R., ‘The Machine, the Worker exam is an appropriate marker of professional obligation, professional and the Engineer’, Science, 105, 1949, associations and government 79, 80. professional competence, especially 3 Allsop, J., ‘Professionalism and over the course of a career. regulators in the mix. The models Commercialism: Conflict or Harmony in are evaluated to identify the Modern Legal Practice?’, Australian Law Journal, 84, 2010. characteristics of the most effective 21 years of regulatory innovation through professional standards 45

regulatory environments, the After identifying professional The PSC is a major partner benefits of consumer protection, challenges, we argue that it is in a three-year Australian and the public interest arising a mistake to pit professionalism Research Council Linkage from professions. against commercialism and project about professions, managerial efficiency rather than professional obligation Training benefits trying to understand how they may and regulation in the 21st The next project considers the co-exist ethically.3 century. ARC Linkage training of professionals and the grants seek to develop best strategies for assuring the We argue for greater attention to research alliances between public of professional competence. professional formation, such as universities and other It considers whether a national exam teaching new professionals to organisations to encourage (taking the example of financial recognise, talk about and internalise innovation and a link advisers) is a panacea for concerns their knowledge, especially for better between research and about competency or whether it is ethical decision-making. practice. a useful part of a wider professional We find reasons for optimism Researchers from three integrity system. The research also in life-long learning and in the Australian universities: considers ethics training, continuing greater understanding that helping UNSW, Griffith University education for professions and life- professionals flourish also helps and UTS, and three long learning. their clients. international universities: Harvard University, Likewise, testing indicators of the Role of insurance University College Dublin, value of professions is important in Another project seeks to understand and University of Leeds, discharging a statutory mandate the role of professional indemnity are collaborating with four insurance (PII) in imposing internal (such as that of the PSC) to see partner organisations: the and external controls on professional what works, in which contexts, and law firms Allens and Corrs, behaviour. These controls are part of whether and how conduct standards the Investment Industry the general governance in qualifying are improving. Association of Canada, and professions for a scheme under Our purpose as researchers is to the PSC. The project began the PSC legislation. This research use our findings to develop practical in March 2015 and asks how PII might complement the strategies for regulatory improvement is led by UNSW. regulatory objectives of the PSC of and to make these available to the In the context of the raising professional standards and PSC, their professional associations challenges faced by protecting consumers who use the and their practising members. The professions in the 21st services of professionals. handbook will be important in the century, the research practical delivery of this objective. project explores Improvement is the aim Above all, the aim of the research professionalisation, These projects and others, such project is to help the PSC to professional obligation as the indicators of the value of advance their statutory purposes to and how it is exercised in professionalising and the handbook, improve occupational standards and practice, and mechanisms aim to identify strategies and consumer protection by boosting for professional regulation. tools to improve the regulation of professionalism through the quality professions, professional conduct of its supporting regulation. and consumer protection. Future outlook 46

The Councils’ high-value approach

The vision of the Professional Formation of the Councils Set up as independent statutory Standards Legislation (PSL) is to The business sector went through bodies, the Councils were given strengthen consumer protection turbulent times in the late 1980s powers to assess and approve and raise standards of professional in reaction to events overseas that applications from professional service delivery while ensuring better eventually led to the Australian share associations for capped liability access to professional indemnity market crash in 1987. As a result, schemes under the professional insurance. The Professional many businesses faced closure, standards legislation for each Standards Councils (PSC) are the including the insurance providers state and territory. custodians of this vision and uphold that traditionally underwrote The reach of professional standards the interests of consumers on behalf commercial risks. legislation was extended in 2001 of State and Territory governments. The NSW Government recognised after corporate giant HIH Insurance that this would leave consumers collapsed, affecting thousands “The Professional vulnerable and proposed a solution of people. This financial disaster Standards Schemes that would raise the standards of highlighted the importance of have benefits for professionals while limiting their maintaining stringent corporate both consumers liabilities and ensuring they held governance and liability practices sufficient insurance. The aim was to protect consumers. and the professional to support consumers with a wide and occupational Subsequently the Commonwealth choice of suppliers and to encourage Government enacted members.” competition while maintaining or complementary legislation that raising standards of professional Esther Alter, allowed occupational liability Deputy Chairperson, PSC competence and service. to be limited under the Trade Practices Act 1974 (now the Competition and Consumer Act The PSC came into being first in 2010), the Corporations Act 2001 New South Wales in 1995 and then and the Australian Securities and progressively in all other states Investments Commission Act 2001. and territories. More on the history of the Councils can be found in Each Council has a chairperson, History and evolution. 1996 Professional Standards Councils deputy chairperson and Councillors Pat Griffin, Julie Owen, Warwick Wilkinson appointed by the State and Territory Here we detail the role of the The NSW Government formed the Attorneys-General. Under an Councils, the Professional Standards Professional Standards Council of innovative structure brought about Authority (PSA) and the professional NSW in 1995 after the Professional by Ministerial agreement across the associations in enacting Professional Standards Act 1994 (NSW) was country, all 11 members of each Standards Schemes under the passed. This ground-breaking model State and Territory Council are the legislation. was picked up by the other states same people. NSW and Victoria and territories, which constituted nominate two members each, while their own Professional Standards all other states or territories and Councils gradually over the next the Commonwealth nominate one. 10 years. Members are appointed for up to 21 years of regulatory innovation through professional standards 47

three years and can be reappointed Councils’ statutory functions include Professional Standards Schemes are at the end of their term. approving schemes; monitoring unique to the Australian professional occupational standards and risk business community and limit the Appointments are based on an management; and encouraging and occupational liability of association individual’s skills, qualifications, helping improve self-regulation and members who have an insurance experience and ability to contribute occupational standards. policy and/or business assets equal to the work of the Councils. to the limitation of liability amount. In taking this step, an association commits to upholding standards Each association requires its across a profession, managing members to meet a minimum consumer risks and subjecting its insurance standard and each professional integrity systems to scheme has a maximum lifespan external review. of five years, after which time the association must apply for a new A scheme requires occupational 2015 Professional Standards Councils scheme, although they can also Robert Beaton, Iain Summers, Terry Evans associations to improve the apply for a one-year extension. This professional standards of their helps ensure robust mechanisms members by implementing risk protect consumers and meet management strategies and evolving professional standards. codes of ethics and conduct. Some associations – such as the College of Investigative and “Having a Professional Remedial Consulting Engineers, 2015 Professional Standards Councils Standards Scheme the Law Society of NSW and the Tom Karp, Esther Alter, Rachel Webber maintains the focus Professional Surveyors Occupational Role of the Councils of the professional Association – have had schemes The PSC play a key role in promoting association on the since 1998. the objectives of professional core aspects of The Councils review the standards legislation, which is to professionalism that associations’ schemes annually to improve professional standards, ensure the associations meet the protect consumers who use the are so important required professional standards. services of professionals, and to maintaining develop schemes that limit the consumer protection.” The Councils also play a key role in civil liability of professionals whose improving professional standards Rachel Webber, and protecting consumers by: associations meet professional Councillor, PSC standards and risk management • providing governments with requirements. advice regarding the professional Association members who come standards of members of The Councils are not regulators under a scheme commit to a professional associations, including in the usual sense. They are high degree of professionalism, the operation of Professional meta-regulatory bodies. That is, to maintaining competence, Standards Schemes they support the self-regulation to managing client risk and • encouraging and promoting the of occupational groups by their to subjecting themselves to self-regulation of professional representative bodies. The assessment and audit. associations Future outlook 48

• overseeing the strategy for PSC have supported amendments Before recommending the scheme research, education and thought to professional standards legislation to the relevant state or territory leadership in professional that allow Professional Standards minister, the Councils post a public standards and regulation Schemes to be recognised across notice of the draft scheme in a • awarding research grants and multiple jurisdictions. major daily newspaper in each professional standards grants. jurisdiction in which the scheme State and Territory governments applies, to allow for comment. Once Approving schemes for have cooperated to build a gazetted and in force, the scheme occupational associations framework for consistency and limits the occupational liability of the A growing number of associations mobility of professionals across association’s members. and their members are making Australia. As well as assessing and approving significant efforts to improve their The PSC review each application for Professional Standards Schemes, professional standards. a Professional Standards Scheme the PSC monitor associations’ in accordance with the PSL. If they statutory compliance obligations, “About 65,000 approve it, they recommend the including how they implement and scheme to the relevant state or professionals have monitor their risk management territory minister for publication in been brought into the strategies. the Government Gazette. A scheme national framework comes into force after it has been to improve gazetted. professionalism “The Professional Before approving a scheme, the and Professional Councils must consider: Standards Legislation Standards Legislation • all comments and submissions has really helped has been a catalyst about the scheme the occupational for strengthening • who the consumers are and how associations the culture of they will be affected and members of professional • the nature and level of claims the professional associations.” relating to occupational liability schemes focus on made against members of the the importance of Robert Beaton, association Councillor, PSC • the association’s risk management risk management.” strategies and how they will be Iain Summers, implemented Councillor, PSC When an occupational association • the cost and availability of applies for a Professional Standards insurance, and the association’s Risk management reports make up Scheme, it indicates the jurisdictions standards in relation to insurance a significant part of the associations’ to be covered by the scheme, which policies statutory annual compliance may include all states and territories. • the strategies in place to protect reporting, which they must provide As members of professional consumers. associations may work across for the life of the scheme. Australian state borders, the 21 years of regulatory innovation through professional standards 49

The professional standards The PSC determine the limitations Professional Standards legislation has created a framework of liability for professional and other Authority to improve the rigour with which associations, though limited liability The PSC has its agency in the associations analyse and address is available only to members of Professional Standards Authority public risks and provide assurance associations with a Professional (PSA). to consumers. Standards Scheme. The PSA is the national regulatory Professional Standards Schemes When determining limited liability, agency with a core purpose of also give association members the Councils must consider the protecting Australian consumers by the capacity to maintain adequate nature and level of claims made improving professional standards. insurance, rather than risk being against members of the association It has 25 staff members, made under-insured or having insufficient and the need to adequately protect up of expert legal, regulatory and assets to cover their liabilities. consumers. professional standards personnel This gives consumers confidence The Councils obtain independent with experience across professions, because the members of the actuarial advice when deciding on government and the commercial association have to be insured at the appropriate caps for members of sector. least to the limit of their liabilities. a particular occupational association. As an expert regulatory and research These caps are set high enough to Determining limited liability agency, the PSA supports wider cover all consumer claims and most ‘Liability’ is a legal obligation that strategies on regulatory reform and corporate claims for economic loss. one person might owe to another professionalisation in the service because the first person acted in By diminishing the risk of economy. The PSA provides a way that caused a loss for the catastrophic claims, the PSC advice where there is an identified second person, or failed to act can help ensure that professional consumer risk that would benefit in a way that would avoid a loss. indemnity insurance remains readily from professional standards. available and affordable. Most individual businesses have This agency is supported by the professional indemnity insurance NSW Department of Finance, to cover their occupational liability. Services and Innovation. It has The cost of professional indemnity service agreements between the insurance is affected by the level PSC in every state and territory of risk associated with the work, and their respective Department the history of claims in that area of Attorney-General and acts as and against the business, and the key agent for the Australian developments in the insurance Government’s combined PSC. market. Ministers in all states and territories Professional Standards Schemes signed the Professional Standards can limit civil liability by capping the Agreement in 2005, providing a amount that can be awarded in a national system of professional civil action related to a participating standards regulation. It was reviewed member’s performance, with some and re-signed by all jurisdictions in exceptions. 2011. Future outlook 50

This agreement allows common The PSA executes Scheme management includes membership of all State and Territory the Councils’ thought assessing new scheme applications, Professional Standards Councils leadership strategy by analysing claims data and the and ensures common services conducting research, professional integrity systems and support are provided through promoting debate and of associations. It also involves the NSW Department of Finance, developing educational liaising with associations, providing Services and Innovation. resources about information to Councils for scheme regulation, professional approval, and administrative Two further agreements – the standards and functions such as public gazettal Professional Standards Council professionalisation. of scheme applications. Interdepartmental Service Agreement, and the Professional Over 2014–15 it administered 27 Help for consumers Standards Councils and schemes from 19 occupational After 21 years, the PSC are Departmental Procurement of associations across Australia, becoming even more relevant, and Services Agreement – formalise covering more than 69,000 support for what we do is growing. how the PSA, within the NSW accountants, valuers, computer Visit www.psc.gov.au for lists of Department, provides advice and professionals, engineers, lawyers associations covered by PSL and services to all the Councils. These and barristers. Professional Standards Schemes in agreements also govern how the The PSA’s core business functions each state and territory, notifications departments procure these services are regulatory assurance and of new associations applying for a using fees and other revenue scheme management. However, it Professional Standards Scheme and received by the Councils under PSL. also provides services, information information on how to contact the The PSA’s strategic focus is to and advice to occupational relevant associations. protect consumers by improving associations and consumers the practices and conduct of about Professional Standards professional communities covered by Scheme applications on behalf of PSL. It does this by helping the eight the eight Councils. PSC apply, administer and regulate Regulatory assurance refers professional standards legislation in to monitoring associations for their jurisdictions, acting as an agent compliance with the legislation, of the Councils. analysing their annual performance, The organisation delivers a variety providing feedback, supervising the of services to a large and diverse application of integrity systems and range of stakeholders, including helping them make improvements. commercial and professional communities. 21 years of regulatory innovation through professional standards 51

Professional Standards Councils 1994 to 2015

Current members Past members Alison Peters Brian Rayment QC, Chairman Ches Baragwanath Hugh Plaistowe Esther Alter, Deputy Chairperson Narelle Bell Janine Sargeant Robert Beaton Kevin Blume Naomi Steer Julie Cameron Anna Borzi Michael Veysey (alt) Terry Evans Steven Cole (Deputy Chairman) John Westlake (alt) Tom Karp Louise Cox Warwick Wilkinson, AM (Chairman) Jo Metcalfe David Fairlie Edward Williams (alt) Tiina-Liisa Sexton Ronald Farrell

Iain Summers Gail Gregory

Rachel Webber Patrick Griffin

Martyn Hagan (alt)

Justin Harper

Anthony Hordern (alt)

Lisa Hunt

Paul Isherwood

Wendy Liiv

Dr Simon Longstaff

John Mallick, AM

James McBean (alt)

Dr Peter Miller, AM

Glen Milliner

Joycelyn Morton (Deputy Chairperson)

Martin O’Connell

Madeleine Ogilvie

Julie Owen Future outlook 52

The Councils’ aims

PROTECT IMPROVE HELP

Protect consumers Improve professional standards Help associations The goal of the Professional A growing number of associations The Professional Standards Standards Councils is to protect and their members are making Councils’ role is to strengthen consumers by demanding significant efforts to improve and improve professionalism high professional standards their professional standards. within occupational associations and practices from those who The Professional Standards and promote self-regulation participate in Professional Councils work with associations while protecting consumers. Standards Schemes. Associations to help them develop effective The Councils decide whether within the regulated communities self-regulation and to improve to approve applications for are expected to ensure their their professional standards by Professional Standards Schemes members uphold these standards implementing risk management under professional standards through education and guidance, strategies and professional legislation, and monitor monitoring and enforcement, and integrity systems. and enforce associations’ other measures. administration of schemes. Once The Councils conduct research, approved, civil liability is limited develop policies and guidelines, for professionals who are and organise events to promote members of an association debate and change in the areas covered by a scheme. of professional standards, codes of ethics and conduct, and risk management. The evolution of the Professional Standards Councils 2009 The firstCover of Excellence® branded scheme commences in Tasmania on 1 June 2009 2005 Cover of Excellence® Tasmania passes the branded schemes are Professional Standards Act 2007 present in all states and 2000 2005 (Tas), creating the Tas Queensland passes the territories of Australia Professional Standards Council Professional Standards The Professional Over 38,000 2011 Regulations 2007 Standards Council The Professional Standards professionals are Schemes are mutually launches the Cover of Agreement 2005 was Victoria passes the covered across recognised in every Excellence™ brand for executed, providing common Professional Standards Australia by Cover of mainland state and 2015 1997 use by professionals who membership of State Regulations 2007 Excellence® branded territory participate in a scheme and Territory Professional schemes 2013 The number of Western Australia New South Wales The Professional approved and supervised 2003 Standards Councils and the members covered 1995 passes the passes mutual The NSW Professional Standards Agreement Over 55,000 by the Professional use by each council of a by schemes now The first meeting Professional Victoria passes the recognition legislation Standards Regulation 2005 was reviewed, after professionals are Standards Council common secretariat exceeds 69,000 of the NSW Standards Act 1997 Professional Standards under the Professional 2004 is repealed and which all jurisdictions covered across 1980s Professional (WA), creating the Schemes – 5 Act 2003 (Vic), creating Schemes – 8 Standards Amendment replaced with the entered into the Australia by Cover Schemes – 27 Insurance Standards Council WA Professional Associations – 7 the Vic Professional Associations – 8 (Mutual Recognition) Professional Standards Professional Standards of Excellence® Associations – 19 market crisis is convened Standards Council Professionals – 11,000 Standards Council Professionals – 19,063 Act 2007 (NSW) Regulation 2009 Agreement 2011 branded schemes Professionals – 69,197

1994 1996 1998 2002 2004 2006 2008 2010 2012 2014 New South The first schemes are NSW passes The NSW Professional Queensland passes the South Australia passes The Northern Territory Mutual recognition The number of members The Professional Wales passes approved for engineers the Professional Standards Council Professional Standards Act the Professional passes mutual recognition amendments are passed in covered by schemes Standards Councils the Professional and solicitors under Standards launches a grants 2004 (Qld), creating the Qld Standards Regulations legislation under the Western Australia through now exceeds 50,000 undertake a review of their Standards Act 1994 the Professional Regulation program Professional Standards Council 2006 Professional Standards the Professional Standards branding and change from

(NSW), creating the Standards Act 1998 Amendment (Mutual Amendment Act 2010 (WA) Cover of Excellence® to South Australia passes the First Commonwealth NSW Professional 1994 (NSW) Recognition) Act 2008 Professional Standards WA passes the Professional Standards Act representative appointed The Professional Standards Standards Council (NT) Schemes Schemes – 3 Professional 2004 (SA), creating the SA to the Professional Councils relaunch the grants Associations – 4 Standards Professional Standards Council Standards Councils The ACT passes mutual program nationally The number of members Professionals – 396 Regulations recognition legislation covered by schemes now The Northern Territory passes Schemes – 31 1998 under the Justice and exceeds 60,000 (60,747) the Professional Standards Associations – 13 Community Safety Act 2004 (NT), creating the NT Professionals – 39,709 The NSW Professional Legislation Amendment Professional Standards Council Standards Regulation Act 2008 (ACT) 2009 is repealed and 21 years of regulatory innovation through professional standards The Australian Capital Queensland passes replaced with the Territory passes the Civil © 2015 Professional Standards Councils of the Australian Capital Territory, New South Wales, the mutual recognition Professional Standards Law (Wrongs) (Proportionate Northern Territory, Queensland, South Australia, Tasmania, Victoria and Western Australia. legislation under the Regulation 2014 Liability and Professional You may copy, distribute, display, download and otherwise freely deal with this work for any purpose, Justice and Other Standards) Amendment Act provided that you attribute the Councils. You must obtain permission from the Councils, if you wish Legislation Amendment 2004 (commencing in 2005), to: (a) charge others for access to the work (other than at cost); (b) include the work in advertising or a Act 2008 (Qld) creating the ACT Professional product for sale; or, (c) modify the work. Standards Council The Northern Territory This document has been prepared by the Councils for general information purposes. While every care passes the Professional The Commonwealth has been taken in relation to its accuracy, no warranty is given or implied. Recipients should obtain their Standards Regulations Government passes own independent advice before making any decisions that rely on this information. the Treasury Legislation Schemes with mutual This document is made available on the understanding that the Councils will have no liability (including Amendment (Professional recognition begin to but not limited to liability by reason of negligence) for any loss, damage, cost or expense whether Standards) Act 2004 operate direct, indirect, consequential or special, incurred by, or arising by reason of, any person using or relying (Cth) which permits the on the information contained in this document and whether caused by reason of any error, omission or The timeline captures significant events Commonwealth to prescribe misrepresentation in this document or otherwise. schemes to limit the over the last 21 years including the dates Whilst the information contained in this document is considered to be true and correct at the date of liabilities of occupational publication, changes in circumstances after the time of publication may impact the accuracy of this on which all relevant legislation was passed associations under applicable document. by their respective parliaments, and the Commonwealth legislation Print version 978-0-9944805-0-7 establishment of each State and Territory The NSW Professional Professional Standards Council. Standards Regulation 1998 Online version 978-0-9944805-1-4 is repealed and replaced Published in December 2015 by the Professional Standards Councils. 21 YEARS OF REGULATORY INNOVATION THROUGH PROFESSIONAL STANDARDS PROFESSIONAL THROUGH INNOVATION REGULATORY OF YEARS 21

21 years of regulatory The evolution of the Professional Standards Councils innovation through professional standards

1997 Western Australia 1995 passes the The first meeting Professional of the NSW Standards Act 1997 1980s Professional (WA), creating the Insurance Standards Council WA Professional market crisis is convened Standards Council

1994 1996 1998 New South The first schemes are NSW passes Wales passes approved for engineers the Professional the Professional and solicitors under Standards Standards Act 1994 the Professional Regulation (NSW), creating the Standards Act 1998 NSW Professional 1994 (NSW) WA passes the Standards Council Schemes – 3 Professional Associations – 4 Standards Professionals – 396 Regulations 1998

PROFESSIONAL STANDARDS COUNCILS

PROFESSIONAL STANDARDS AUTHORITY

ADDRESS Level 2, St James Centre, 111 Elizabeth St. Sydney NSW 2000 PROFESSIONAL STANDARDS COUNCILS GPO Box 4021 Sydney NSW 2001

PHONE 1300 555 772 (toll-free) The timeline captures significant events 02 8315 0800 over the last 21 years including the dates on which all relevant legislation was passed EMAIL by their respective parliaments, and the [email protected] establishment of each State and Territory WEBSITE Professional Standards Council. psc.gov.au