30 November 2017

The regulatory landscape

The Food Standards Agency (FSA) is responsible for the oversight of food safety and food hygiene in the UK. It works alongside local authorities to monitor and enforce compliance with food safety regulations.

The FSA does not, however, operate in a national vacuum – it also works alongside EU level institutions which bear key responsibilities for the regulation of food safety in the UK. In particular, the European Food Safety Authority (EFSA) carries out the bulk of risk assessment for the EU. Key EU-wide risk management decisions are taken by the European Commission and the European Council. In addition, important systems for providing warning of food safety issues, most notably the Rapid Alert System for Food and Feed (RASFF), are administered at an EU level.

The need for reform

After a long period of consultation, the FSA published its plans for reforming food industry regulation on 19 July 2017, in a paper entitled "Regulating our Future". But why does the regulatory model need to change?

An obvious answer is Brexit. Brexit will undoubtedly force changes in the FSA’s regulatory model due to its impact on supply chains, trade and food production. Once outside the EU, it will be crucial that the UK’s food safety, import and export controls inspire confidence in our food industry.

Many of our key systems for monitoring food safety are centralised at an EU level. The FSA faces the challenge of ensuring that equivalent arrangements are in place post-Brexit so that the standard of regulation is not compromised. After Brexit, the FSA will need to take on many of the responsibilities that are currently born by EU institutions.

However, the impetus for the FSA's "Regulating our Future" programme was not Brexit – the need for regulatory change had been identified long before the referendum vote in June. The current regulatory approach, which has been in place for over 30 years, has become outdated and ill-adapted to today's rapidly evolving food industry.

The industry now includes a number of new stakeholders, including food delivery services and online businesses, as well as traditional retailers and manufacturers. This brings a number of new risks which the current system is not equipped to deal with.

Another flaw in the current system is that the FSA has no visibility over how many food businesses exist and who is operating them. This is because key information regarding food businesses tends to be held by local authorities, rather than centrally.

The current regulatory model also needs to change to alleviate the financial pressure on the FSA and on local authorities, which have been the subject of funding cutbacks in recent years. A number of the proposed reforms have the secondary purpose of relieving the financial constraints on local authorities' enforcement activities.

What will change?

The FSA has yet to reveal the mechanics of how the new model will operate – July's paper is intended to provide a high level blueprint rather than a comprehensive plan. However, it is already clear that many of the changes represent a wholescale departure from the current regulatory approach. These are:

  1. Enhanced registration: The FSA plans to strengthen the current registration system to encourage all food businesses to register on a central database before they start trading. This will be done through better use of technology (for example by creating an easy-to-use online platform) and by incentivising businesses to participate through strategic alliances with third parties (such as insurers and financial institutions). The FSA says it intends to create a "hostile environment" for those who do not proactively register, although it has not yet given any detail on how this will be achieved. The FSA has indicated that it intends to implement the new system by the time the UK exits from the EU.
  2. “Permit to trade”: A step further than enhanced registration, the "permit to trade" would require businesses to obtain a permit before they begin trading. However, the FSA recognises that this type of system would require new legislation, which will take time to implement. For this reason, the FSA's current focus is on implementing enhanced registration.
  3. Segmentation: The FSA is advocating moving away from a "one size fits all" approach towards a risk-based approach, under which the level of regulatory intervention will depend on a business' risk-rating. The higher the risk, the greater the level of inspection. In determining risk, the FSA will take into account a compliance history (on food standards and food hygiene) and information submitted at the point of registration. The FSA has even indicated that it may take into account a business’ compliance record in other regulatory areas beyond food.
  4. Private assurance schemes: This is one of the principal ways that the FSA intends to relieve the burden on local authorities – by giving formal recognition to private assurance schemes, which many food business operators already invest in. The FSA may also introduce the role of "Certified Regulatory Auditor" – private sector auditors who are certified to carry out audits on behalf of the FSA.
  5. Sustainable funding: The FSA intends to shift the cost of food regulation to food businesses and is devising a new funding model. Formalising the role of private assurance will be a key pillar of this.

How will these changes affect food businesses?

The FSA has set a target of 2020 for the new system to be designed, but has made it clear that the changes will be implemented across two distinct phases – phase 1, delivery of EU exit and phase 2, delivery post EU exit. Given the timescales involved and the uncertainty surrounding the UK’s position post-Brexit, it is difficult to predict how the reforms will work in practice.

Since last year the FSA has been consulting with stakeholders on the mechanics of the new system. This engagement has included pilot studies involving Tesco, Mitchells & Butlers and most recently a pilot project on the potential for formal recognition of the BRC Global Standard for Food Safety, the results of which were published in September 2017. All of these studies confirmed the potential for private assurance schemes to provide an alternative to local authority inspections and to inform local authorities' assessment of business' compliance levels. However, these pilots also highlight that the reforms are at a very early stage. Some fundamental aspects of private assurance, including ensuring the independence of private auditors, the standardisation of inspection criteria and competence standards for private auditors, still need to be explored and addressed.

Although the changes proposed by the FSA are far-reaching, businesses can take some comfort in the level of industry engagement shown by the FSA. The FSA's commitment to developing the use of technology is to be welcomed and has scope to reduce the administrative burden on many businesses. In addition, the FSA’s commitment to information sharing and recognising private assurance schemes can only be a good thing, as it means that businesses who are already doing the right thing will be recognised.

Will the proposed reforms work in practice?

The recent under-cover investigation which exposed alleged food safety, hygiene and labelling offences at a poultry meat processing plant belonging to 2 Sisters Group has highlighted some of the shortcomings of the proposed reforms. The business had a raft of policies and procedures in place at the time of the incident, the site in question had been inspected by the regulator and had been audited by the various supermarkets which buy their chicken from 2 Sisters in the months leading up to the under-cover investigation at the site. Despite this, nobody raised significant concerns about practices at the site.

On the face of it, 2 Sisters appeared to be a low-risk, safety-compliant business. Under the proposed reforms, it seems that this type of food business could expect to receive less, not more scrutiny by the regulator. This is clearly a concern and we watch with interest to see if, and how, the FSA intends to address this issue.

Oxford Farming Conference 2018

Burges Salmon is the sponsor of the Science Lecture at the 2018 Oxford Farming Conference. The inaugural Science Lecture will be delivered on Thursday 4 January by Professor Chris Elliott. Professor Elliott will be speaking about the controversial issue of sustaining global food supply to the rapidly growing world population and challenge the audience with ideas about the future of global food security and the role we have to play in it.

You may also be interested in reading our previous article on this theme: Food fraud: how will Brexit affect fraud in the food supply chain?

This article was written by Reshma Mistry.

Key contact

Helen Scott-Lawler

Helen Scott-Lawler Partner

  • Head of Food and Drink
  • Commercial
  • Intellectual Property and Media

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