Why does a regulator impose a financial penalty on a regulated body? To punish it? To discourage any repetition of the offending conduct? To deter others from doing the same thing?
The answer, clearly, is all of the above. However, two fines imposed by different regulators on consecutive days in October 2016 tell contrasting stories.
In one case, Ofcom fined Vodafone £4.6 million for failings related to its customer account and complaints handling systems. This is the largest fine it has ever imposed on a telecoms operator, and follows a recent pattern of sectoral regulators handing out record penalties. Some regulators may well be over-using their fining powers (a point to which I will return in a later post), but no-one can say that they are not treating them as a serious part of the regulatory toolkit. Even for a company as large as Vodafone, a fine of £4.6 million, straight off the bottom line, does not pass unnoticed.
By contrast, on the previous day, the UK Electoral Commission, in what, for it, was also the imposition of a record financial penalty, fined the Labour Party the somewhat less substantial sum of £20,000.
Why the disparity, and what does it tell us?