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4 The legal foundation for the self-regulatory system envisioned by this MOU is the Deregulation and Contracting Out Act 1994 ('DCOA'). Where a Minister or other public authority (like Ofcom) has been given specific functions or duties by legislation, DCOA allows the Minister or public authority to delegate or 'contract out' those functions to another person or organisation. Ofcom has been given the power to contract out its functions under DCOA by Section 1(7) of the Act.

5 Ofcom's duties and functions in the area of broadcast advertising regulation derive in the main from Sections 319 to 328 of the Act. Ofcom is intending to use DCOA to contract out some of its functions under the Act and various related statutory instruments (discussed at 7 below). In particular, Ofcom is intending to contract out from the Act:

1. its functions relating to the setting, reviewing and revising of standards codes for broadcast advertising to BCAP (from section 319(1))
2. its functions relating to the handling and resolving of complaints about the observance of broadcast advertising standards codes to ASA(B) (from section 325(2)) and
3. other supplementary functions to ensure that BCAP and ASA(B) are invested with the appropriate legal authority they require

6 Ofcom is also intending to use DCOA to contract out to ASA(B) its functions relating to the handing and resolving of complaints about the compliance of broadcast advertising with the Control of Misleading Advertisements Regulations 1988 and the Medicines (Monitoring of Advertisements) Regulations 1994.

7 Ofcom will contract out its functions by giving an authorisation ('the Authorisation') to BCAP and ASA(B) under the DCOA Order which will set out, in legal terms, the statutory functions to be delegated and the limitations and conditions on the exercise of those functions by BCAP and ASA(B). The limitations and conditions are necessary to ensure that Ofcom is able to fulfil its duties under the Act, and to ensure that due process is followed by BCAP and ASA(B) in exercising the delegated functions. As a matter of law, the DCOA Order and Authorisation will govern the scope of the delegated powers of BCAP and ASA(B), and the legally binding commitments of the Parties will be set out in contracts to be drawn up between the Parties. This MOU is intended to describe the intentions of the Parties in more detail, and at a more practical level, than is required to be reflected in the Authorisation (see, in particular, 'Functions to be delegated' below).

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