Engineers must play by the rules

The financial crisis showed that regulation is vital for all sectors

"The decision by the Irish Financial Services Regulatory Authority (IFSRA) to put Quinn Insurance into administration was a landmark event. Matthew Elderfield’s personal conviction and that of a revived financial regulatory authority is clear and unequivocal.

While nobody wants to see a venerable Irish business fall on tough times (not to mention the associated threat to jobs), the development should be seen as positive. IFSRA’s single-mindedness and determination to be independent of all outside influences is to be lauded. And with plans to extend the Financial Regulator’s focus to include the actions of bank directors, these are changing times.

We have also seen strong regulation from the Aviation Regulator during the recent volcano crisis. The aviation business has a simple rigour: safe aircraft, safe airspace, safe groundspace. These concepts work well in regulation and it makes one wonder how we would have fared in the recession if these principles had been applied to banks through financial regulation.

With IFSRA now blazing a trail, there is now an opportunity to use a new extensive era of effective regulation in Ireland as a selling point for the country. Too little, or “light-touch”, regulation, can often result in the malaise we have seen in the banks and the financial sector worldwide. Too much, however, stifles competition, creativity and innovation. Whether you are referring to banks, businesses or professions, regulation is about balance.

By applying the rigours of effective regulation across all aspects of Irish industry, Ireland has an opportunity to differentiate itself from other countries. Taking our financial collapse as a starting point, we have the potential to show we can become a new model of high standards and quality assurance. Most importantly, this has the potential to stimulate the economy and boost growth.

An effective regulatory framework that fosters a culture of accountability and high standards will appeal to foreign direct investors and also act as a platform for the smart economy, ultimately creating much-needed new jobs.

Professionals and business people often bristle at the very mention of the word “regulation”. It has connotations of restrictions and red tape. But there is a misconception that regulation is always anti-competitive.

Engineering has a critical role to play here in terms of how it behaves as an industry and it is already taking a lead with regard to ensuring the highest standards are maintained. The profession is out of step with doctors, pharmacists, architects, vets, dentists and nurses, who are all statutorily regulated.

At a time when Ireland has belatedly (and at great financial cost) rediscovered the importance of effective regulation, it is time for the legislative issue regarding engineering to be addressed. This is critical because, unlike the financial world where poor standards lead to monetary loss, engineering failures harm people and lead to loss of life.

It would be wrong to wait until there is some awful incident, be it in the construction sector, at a power station or in a chemical plant, for this anomaly to be rectified. Regulation does not mean hampering competition and obstructing freedom of trade. It means embracing the highest quality and standards across all engineering disciplines.

The best example of effective regulation of engineers is in Canada. Malaysia also has a compulsory licensing system. In the United States, licensure is required for anyone who offers their services to the general public while degrees of regulation exist in Hong Kong, the UK and Japan. These countries recognise that engineers have a tremendous impact on all aspects of their economy as well as issues pertaining to public safety, the environment and the quality of life in their communities Ireland now has the opportunity to commit to a framework of quality and standards. The failure in the financial and banking sectors over the past two years has given us a platform to reshape our economic model in this respect.

Let’s take a lead from Elderfield and ensure Ireland stands out as a regulatory model that breeds excellence and the highest standards across our economy and professions."

This article appeared in The Sunday Times on 16th May 2010.