The term "mediation" can cover a wide range of dispute resolution practices which stop short of legal action. It is sometimes used to cover arbitration, but the process of commercial arbitration has come to resemble litigation so closely in recent decades that mediation is often distinguished from it as a third avenue.
The pros and cons of the government regulating mediation and mediators can, however, be derived from what has generally happened to commercial arbitration proceedings. Arbitration was originally conceived as a cheaper, quicker, less adversarial alternative to litigation. However, modern commercial arbitrations involving large sums of money are conducted with extensive documentation and teams of lawyers in such a way that they are barely distinguishable from legal trials.
Government regulation has much the same effect on mediation. On the positive side, unqualified people will be prevented from acting as mediators. The entire process will be held to a more rigorous and consistent standard. The potential for dishonesty and inadequate disclosure will be reduced significantly. However, on the negative side of the argument, there is the potential for the process to become sclerotic and too similar to litigation. Legal experts will be necessary to ensure that the process complies with regulations, and this immediately renders the process more complex and expensive.