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Regulatory agencies, like most public organizations, typically operate with multiple tasks and goals, which requires them to prioritize some tasks over others. Such prioritization, while essential, engenders a risk of bureaucratic oversight of significant material problems. Despite the ubiquity and importance of these concerns, our understanding of agencies' allocation of attention across tasks is limited. This article develops a model of agencies' allocation of attention across tasks, which involves an interaction between external public and political pressures and agencies' distinct organizational identities. A brief comparison between two cases of pre‐crisis financial regulation illustrates the proposed model. The two cases suggest that the British Financial Services Authority's and the Israeli Supervisor of Banks' distinct identities conditioned their responses to similarly vigorous pressures to devote more attention to firms' alleged mistreatment of their customers, with important implications for these regulators' attention to firms' capitalization and liquidity.

What role do regulators and firms play in the construction of open‐ended regulatory terms? The new institutional legal endogeneity model posits that organizations respond to legal uncertainty by adopting formal structures to symbolically signal their compliance. These structures, however, tend to embody businesses' managerial and commercial values, as opposed to regulatory goals. Law becomes endogenous insofar as legal actors then defer to businesses' institutionalized ideas about regulation and compliance. Professionals, such as lawyers and human‐resource managers, and their strategic deployment of framing, are portrayed as the engines of the above process of legal endogeneity. By comparison, administrative agencies' strategies in shaping the meaning that corporations attach to the law are practically ignored. Building on a detailed case study of British financial firms' responses to the Financial Services Authority's Treating Customers Fairly initiative, this article problematizes the supposition of regulatory deference to business constructions of law. Instead, it develops a more balanced model that recognizes business professionals' and regulators' co‐construction of regulation and compliance. The process of regulatory meaning co‐construction, as depicted by this model, involves alignment and disputes between regulators' and professionals' strategic framing of regulatory concerns with tangible consequences for the enactment of regulation.

AbstractThis article analyzes the institutionalization of process‐oriented regulation, namely: regulatory institutions that allow firms to adapt regulation to their individual circumstances, while holding them to account for the adequacy and efficacy of their internal compliance systems. The article's main focus is on the strategies sought by compliance professionals to attain managers' receptiveness to regulatory expectations. It analyzes British financial firms' responses to a process‐oriented regulatory initiative, which sought to transform the widespread culture of product "mis‐selling" in this industry. Three key arguments and hypotheses are put forward: first, it is suggested that the existing theoretical literature on process‐oriented regulation overly stresses managers' rational, profit‐maximizing motivations for (non‐)compliance, whilst overlooking their emotive motivations. Second, it is proposed that managers' emotive resistance is expected when regulatory expectations challenge firms' "organizational identities" and thereby their individual identities. Third, it is hypothesized that when process‐oriented regulation poses a threat to organizations' identities, its institutionalization will entail delegation of the design and subsequent implementation of compliance systems to managers outside compliance, and reframing of regulatory expectations into existing businesses discourses and methodologies.

This article builds upon current scholarship regarding regulatory enforcement to analyze and theorize the little-researched context of public bodies' handling of consumer complaints against firms. The analysis is based on a case study of the Financial Ombudsman Service (FOS), which is a British public agency that handles consumer complaints regarding the retail selling of financial products. The study documents and seeks to explain the FOS' and firms' interaction and their choices between cooperative and adversarial strategies. It finds that the FOS' interaction with firms oscillated between cooperative informal conciliation and adversarial standardized determination of complaints. Firms resisted informal conciliation of complaints when concerned that their agreement to redress an individual complainant might be interpreted by the regulator (the Financial Services Authority), or the media, as entailing compensation awards to a large number of other customers in similar circumstances. Equally, the ombudsman was inclined toward an adversarial, precedent-bound approach to complaints when facing external risks to its autonomy and reputation. These findings form the basis for the formulation of hypotheses regarding the strategic interaction of other third-party complaint handling schemes with both private and public service providers. Furthermore, the findings stress the importance of analyzing regulatory encounters as multiactor games in which firms and regulators interact amid conflicting demands and uncertainties posed by other actors and institutions in their environment. Adapted from the source document.

Current research of third‐party complaint handling institutions evaluates their success in providing redress and advancing service improvement. This focus is driven by a normative predisposition. In contrast, this study is based on an inductive, ethnographic research of the UK Financial Ombudsman Service. This inductive analysis is employed to develop hypotheses to guide future research on third‐party complaint handling. It is suggested that current literature may have overlooked the role of third‐party complaint handling schemes in managing what, from a professional point of view, are citizen‐consumers' excessive expectations for redress. The normative implications of this tentative empirical claim are further discussed.

This article explores the formation of public organizations''domain perception', that is, their internal interpretation and external articulation of their role and its boundaries. The analysis is based on non‐participant observation research of the UK Financial Ombudsman Service (FOS), and archival research of its predecessor organization, which handled consumer complaints regarding the retail selling of financial products. I show that the FOS's articulation of its domain emphasized the strictly individual and confidential nature of its complaint handling, rather than formulation of general principles to guide firms' sale practices. This domain perception embodied an implicit exchange between the ombudsman and the retail financial industry on behalf of consumers, and distinguished the ombudsman's role from that of the Financial Services Authority and the civil courts. The case is employed as means for theory building regarding the nature of public organizations' domain perceptions and the process by which such constructs develop in regulatory contexts.

AbstractStudies of the ramifications of client race and ethnicity for bureaucrats' judgments treat minority status as homogenous. Yet, individual identity does not boil down to race or ethnicity. Members of racial and ethnic minority groups likely vary in their experiences and capacity to overcome the negative sentiments and stereotypes that burden their inherited group. To transcend unidimensional explanations, we combine Van Oorschot's deservingness framework and a gendered lens to study how the intersection of group identity and gender, as well as individuals' work history, co‐shape bureaucrats' categorization of clients. Empirically, we analyze Israeli professionals' categorization of applicants for state benefits, comparing their assessments of men and women of three social groups: the Jewish majority, ultra‐orthodox Jews, and Muslims. Interpreting the empirical findings, we offer that underlying the effect of applicants' group demographics are perceived cultural affinity to the majority and social contributions that vary with gender.Evidence for Practice

Minority status, based on race, ethnicity, or nationality, and the perceived contributions of different groups, shape bureaucrats' judgments of individuals' deservingness for state support.
Minorities' workforce opportunities and interactions with members of the majority likely vary with gender roles.
If traditional gender roles among some minority communities provide men with greater opportunities for workforce participation and for interaction with members of the majority, bureaucrats may perceive women as less deserving than men. Depending on the task at hand, this could hamper women's likelihood of attaining benefits for which they are entitled.