The global and national financial situation continues to pummel businesses and individuals, in a recession blamed largely on a lack of regulation. But Arun Chauhan, a partner within the fraud and asset recovery team at law firm Challinors, wonders whether regulators are being overzealous and adding to the burden on businesses struggling to weather the financial storms.

At one end of the spectrum we have witnessed the recent arguments as regards the proposed completion of the takeover of HBOS by Lloyds TSB and the Government pressing against the banks’ reluctance to pass on the recent bold 1.5 per cent Bank of England’s rate cut. At the other end, reports suggest many individuals in major and smaller industry alike will have to seek a one-month shutdown over the Christmas period as the recession tightens its grip.

With businesses facing such difficult prospects financially, they will not be best pleased to consider the ever-increasing regulation of trade by public authorities such as the Health and Safety Executive and the Environmental Agency. While necessary, industry requires sensible regulation serving the purpose it was intended for.

Businesses need to ensure they are complying with the appropriate regulatory authorities governing their business while remaining vigilant as to over-aggressive policing – there’s been a number of cases recently where the message from regulators has been an overzealous one.

A recent example is a case brought by the Environment Agency (EA) against a client of Challinors. The company was acquiring faulty or rejected electrical goods – some almost unused – to identify what was wrong with them and thereafter where possible the goods would be corrected and resold. This appeared to be a valuable recycling effort serving an environmental purpose but this was not the stance taken by the EA.

The EA took the view the stock was regarded as ‘waste’ for which a waste management licence was required in line with the Environmental Protection Act 1990. The EA prosecuted the company for failure to have the licence which would have cost in the region of £10,000. The first trial concluded with the case being rejected. The EA appealed.

At the Court of Appeal the EA’s case was again rejected with Lord Justice Moses stating the EA was taking a too stringent and extreme a view. The company’s costs of defending the case were recovered in their entirety.

Similar approaches have been taken by the Office of Fair Trading (OFT) where they were seeking to impose terms and conditions as unfair against Foxtons property agents. Rather than take a case-by-case approach as expected, the OFT sought a generic approach by seeking an injunction to prevent infringements against the Unfair Terms and Consumer Contracts Regulations 1999. This was deemed too wide-sweeping and rejected by the courts.

It is therefore somewhat surprising, at a time when industry seeks the assistance and common sense of the Government and its departments, it finds on one hand a very public display of effort, such as enabling the reduction of interest rates but, on the other, a counter-intuitive approach to enforcing regulations. Industry must ensure it is not over-regulated and therefore over-stretched financially.

Businesses must take time to consider their regulatory duties but must also be vigilant to question a stance against them if the application of a regulation appears unfair. This can never be more true than at a time where every penny counts in surviving this economic climate.