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ORR Change to Penalties Policy

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Established Member
21 Dec 2007
Newcastle (unless I'm out)
The Office of Rail Regulator (ORR) has today announced a proposal following their recent consultation on "the role of the Regulator" which will provide an alternative to imposing penalties on a Licence holder, including specifically Network Rail, in cases where a committment is made to make improvements for passengers.

Changing our penalties statement

. . . .we asked if we should consider accepting commitments to make improvements for passengers as an alternative to levying a penalty (“reparations”), where we find a penalty to be appropriate.

Virtually everyone who expressed a view thought we should be prepared to do this as it would bring a much more immediate and tangible benefit to passengers and other customers than a financial penalty and could benefit the railway in the long-term.

. . . . Given this broad consensus and our commitment to a sharper focus on customers, we agree we should change our policy.

. . . . Our enforcement policy already allows us to take account of reparations made when setting a penalty but only if the reparations are made unconditionally (so, for example, without knowing how we will treat them). We have also said we would be unlikely to reduce a penalty “£ for £” to reflect reparations made after we had proposed a penalty. Taken together these conditions have meant there has been little incentive to make reparations and in practice none have been made.

We therefore propose to make two main changes to our policy statement. Firstly, we will remove the requirement that reparations must be offered unconditionally. Secondly, we are prepared in principle to reduce a penalty ‘£ for £’ to reflect reparations offered where appropriate. The annex shows how these changes would be reflected in the section of our enforcement policy that deals with penalties.

These changes will give us more flexibility to accept reparations in lieu of a financial penalty than we have now. We also expect they will make it more likely an operator will offer to make good the harm brought about by a breach of its licence obligations as an alternative to paying a financial penalty. They should incentivise compliance and change future behaviour no less than a penalty without reparations would, but with the added advantage that operators will be actively encouraged to think directly about the impact they have had on their customers and their customers’ needs. The change would be consistent with the approach set out in the Macrory report2 ‘Regulatory Justice: Making Sanctions Effective’, and in particular with the principle that penalties should aim to restore the harm done by non-compliance.

On line here: Changing our penalties statement – May 2012

The ORR is inviting comments on these proposals.
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