Monday, August 23, 2010

Moral Hazards

Does belonging to IFRA under today's regulatory climate constitute a moral hazard? This is a question that was tossed at me recently. Another question and statement was how Fragrance industry regulators are only interested in expanding their numbers, influence and dragging out "comment periods."

In a recent article observing that the moral hazard with self regulatory groups, "Leniency in Private Regulatory Enforcement: the Role of Organizational Scope & Governance." is greatest when enforcement includes products that entice customer loyalty.

The article proposes that internal regulatory enforcement is higher rather then at a self regulatory agency because there is no consequence to the independant regulators.

IFRA members please resign and demonstrate to your clients a higher enforcement standard.

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