Monitor is likely to face “numerous” allegations of improper conduct unless it can clearly separate its future healthcare regulatory role from its responsibility for foundation trusts, its chairman has warned.

David Bennett, chairman and chief executive of the FT regulator, also conceded that responsibility for both regulatory roles “could constitute too much work for a single chief executive”.

Newly published board papers reveal for the first time the detail of Mr Bennett’s plan to avoid conflicts of interest when Monitor takes on responsibility for the entire healthcare sector, under the Health Bill.

In a 30 November report, Mr Bennett admitted there were “real and perceived potential conflicts of interest in discharging these two different regulatory responsibilities”.

“In the coming years, Monitor will have a number of difficult decisions to make,” his paper argued. “Reasonable stakeholders may disagree, for example, over what constitutes an efficient price, what constitutes an appropriate degree of competitive intensity, or whether Monitor should have done more to protect the survival of an NHS FT.

“Unless Monitor can clearly demonstrate it has acted properly, allegations and challenges around improper conduct owing to undue influence being exercised by one regulatory function or the other are likely to be numerous.”

He proposed to create “powerful senior executives as the leaders of the different parts of Monitor”, and a distinct committee of the board to oversee its FT regulator role.

However, he said the case for creating a separate committee for the healthcare regulation role granted to Monitor in the bill was “less clear cut”. While such a committee could further reduce conflict of interest concerns, “in practice many more decisions in this area will have to pass the full board until policy becomes more settled”.

He added that a “clear split” had other advantages: “Sector and FT regulation require different skill sets, making it easier to appoint to the leadership roles if they are separate. Indeed, a joint role could constitute too much work for a single chief executive.”

Senior sources told HSJ in November that there was a disagreement between Monitor and the Department of Health over the degree of separation needed between its two roles, with the department favouring the appointment of separate chairs. Both bodies denied the suggestion of a conflict between them.

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