Regulatory agency

Last updated December 16, 2024

A regulatory agency (regulatory body, regulator) or independent agency (independent regulatory agency) is a government authority that is responsible for exercising autonomous jurisdiction over some area of human activity in a licensing and regulating capacity.

These are customarily set up to strengthen safety and standards, and/or to protect consumers in markets where there is a lack of effective competition. Examples of regulatory agencies that enforce standards include the Food and Drug Administration in the United States and the Medicines and Healthcare products Regulatory Agency in the United Kingdom; and, in the case of economic regulation, the Office of Gas and Electricity Markets and the Telecom Regulatory Authority in India.

Legislative basis

Regulatory agencies may be a part of the executive branch of the government and have statutory authority to perform their functions with oversight from the legislative branch. Their actions are often open to legal review.

However, some regulatory bodies are industry-led initiatives rather than statutory agencies, and are called 'voluntary organisations'.^[1] They may be not-for-profit organisations or limited companies. They derive their authority from members' commitments to abide by the standards applied by the regulator, for instance as the UK's Advertising Standards Authority says "The self-regulation system works because it is powered and driven by a sense of corporate social responsibility amongst the advertising industry."^[2]

Regulatory agencies deal in the areas of administrative law, regulatory law, secondary legislation, and rulemaking (codifying and enforcing rules and regulations, and imposing supervision or oversight for the benefit of the public at large). The existence of independent regulatory agencies is justified by the complexity of certain regulatory and directorial tasks, and the drawbacks of political interference. Some independent regulatory agencies perform investigations or audits, and other may fine the relevant parties and order certain measures. In a number of cases, in order for a company or organization to enter an industry, it must obtain a license to operate from the sector regulator. This license will set out the conditions by which the companies or organizations operating within the industry must abide.

Functioning

Regulatory regimes vary by country and industry.

In the most light-touch forms of regulation, regulatory agencies are typically charged with overseeing a defined industry. Usually they will have two general tasks:^[3]^[4]^[5]

creating, reviewing and amending standards expected of individuals and organisations within the industry.
Intervening when there is a reasonable suspicion that a regulated individual/organisation may not be complying with its obligations. Under such an intervention regime, regulatory agencies typically have powers to:

oblige individuals or firms entering the industry to obtain a license;
require transparency of information and decision-making on part of the regulated company; and
monitor the performance and investigate the compliance of the regulated company, with the regulator publishing the findings of its investigations.

In the event that the regulated company is not in compliance with its license obligations or the law, the regulatory agency may be empowered to:

require that administrators of the regulated company explain their actions;
undertake enforcement action, such as directing the regulated company to comply through orders, imposing financial penalties and/or revoking its license to operate; or
refer the regulated company to a competition authority, in instances where it may have breached competition law, or prosecute the company (via civil courts).

In some instances, it is deemed in the public interest (by the legislative branch of government) for regulatory agencies to be given powers in addition to the above. This more interventionist form of regulation is common in the provision of public utilities, which are subject to economic regulation. In this case, regulatory agencies have powers to:

require the provision of particular outputs and/or service levels; and
set price controls or a rate-of-return for the regulated company.

The functions of regulatory agencies in prolong "collaborative governance" provide for generally non-adversarial regulation.^[6]Ex post actions taken by regulatory agencies can be more adversarial and involve sanctions, influencing rulemaking, and creating quasi-common law.^[7] However, the roles of regulatory agencies as "regulatory monitors" provide a vital function in administering law and ensuring compliance.^[7]

By country or international organization

Related Research Articles

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Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. For example:

In administrative law, rulemaking is the process that executive and independent agencies use to create, or promulgate, regulations. In general, legislatures first set broad policy mandates by passing statutes, then agencies create more detailed regulations through rulemaking.

Banking regulation and supervision refers to a form of financial regulation which subjects banks to certain requirements, restrictions and guidelines, enforced by a financial regulatory authority generally referred to as banking supervisor, with semantic variations across jurisdictions. By and large, banking regulation and supervision aims at ensuring that banks are safe and sound and at fostering market transparency between banks and the individuals and corporations with whom they conduct business.

In general, compliance means conforming to a rule, such as a specification, policy, standard or law. Compliance has traditionally been explained by reference to deterrence theory, according to which punishing a behavior will decrease the violations both by the wrongdoer and by others. This view has been supported by economic theory, which has framed punishment in terms of costs and has explained compliance in terms of a cost-benefit equilibrium. However, psychological research on motivation provides an alternative view: granting rewards or imposing fines for a certain behavior is a form of extrinsic motivation that weakens intrinsic motivation and ultimately undermines compliance.

The Office of Rail and Road (ORR) is a non-ministerial government department responsible for the economic and safety regulation of Britain's railways, and the economic monitoring of National Highways.

Trading Standards are the local authority departments with the United Kingdom, formerly known as Weights and Measures, that enforce consumer protection legislation.

Law enforcement in Malaysia is performed by numerous law enforcement agencies and primarily the responsibility of the Royal Malaysia Police. Like many federal nations, the nature of the Constitution of Malaysia mandates law and order as a subject of a state, which means that local government bodies also have a role to play in law enforcement, therefore the bulk of the policing lies with the respective states and territories of Malaysia. Below are some of the law enforcement bodies and agencies of Malaysia.

A gaming control board (GCB), also called by various names including gambling control board, casino control board, gambling board, and gaming commission, is a government agency charged with regulating casino and other types of gaming in a defined geographical area, usually a state, and of enforcing gaming law in general.

The Financial Reporting Council (FRC) is an independent regulator in the UK and Ireland based in London Wall in the City of London, responsible for regulating auditors, accountants and actuaries, and setting the UK's Corporate Governance and Stewardship Codes. The FRC seeks to promote transparency and integrity in business by aiming its work at investors and others who rely on company reports, audits and high-quality risk management.

Industry self-regulation is the process whereby members of an industry, trade or sector of the economy monitor their own adherence to legal, ethical, or safety standards, rather than have an outside, independent agency such as a third party entity or governmental regulator monitor and enforce those standards. Self-regulation may ease compliance and ownership of standards, but it can also give rise to conflicts of interest. If any organization, such as a corporation or government bureaucracy, is asked to eliminate unethical behavior within their own group, it may be in their interest in the short run to eliminate the appearance of unethical behavior, rather than the behavior itself, by keeping any ethical breaches hidden, instead of exposing and correcting them. An exception occurs when the ethical breach is already known by the public. In that case, it could be in the group's interest to end the ethical problem to which the public has knowledge, but keep remaining breaches hidden. Another exception would occur in industry sectors with varied membership, such as international brands together with small and medium size companies where the brand owners would have an interest to protect the joint sector reputation by issuing together self-regulation so as to avoid smaller companies with less resources causing damage out of ignorance. Similarly, the reliability of a professional group such as lawyers and journalists could make ethical rules work satisfactorily as a self-regulation if they were a pre-condition for adherence of new members.

The Health Sciences Authority (HSA) is a statutory board under the Ministry of Health of the Government of Singapore. It is a multi-disciplinary agency responsible for applying medical, pharmaceutical, and scientific expertise to protect and advance public health and safety.

The Solicitors Regulation Authority (SRA) is the regulatory body for solicitors in England and Wales.

Food safety in China is a widespread concern for the country's agricultural industry and consumers. China's principal crops are rice, corn, wheat, soybeans, and cotton in addition to apples and other fruits and vegetables. China's principal livestock products include pork, beef, dairy, and eggs. The Chinese government oversees agricultural production as well as the manufacture of food packaging, containers, chemical additives, drug production, and business regulation. In recent years, the Chinese government attempted to consolidate food safety regulation with the creation of the State Food and Drug Administration of China in 2003; officials have also been under increasing public and international pressure to solve food safety problems. Chinese Vice Premier Li Keqiang said, "Food is essential, and safety should be a top priority. Food safety is closely related to people's lives and health and economic development and social harmony," at a State Council meeting in Beijing.

The California Bureau of Gambling Control is a regulatory agency that is part of the California Department of Justice. It regulates legal gambling activities in California to ensure that gambling is conducted honestly, competitively, and free from criminal and corruptive elements. It is one of two agencies in California regulating gambling, along with the California Gambling Control Commission.

The Division of Commercial Licensing and Regulation is the division of the Rhode Island Department of Business Regulation responsible for the licensing and regulation of real estate agents, brokers and appraisers, auto body & salvage re-builder shops, auto wrecking and salvage yards, travel agencies and travel agents, upholsterers, alarm system installers, auctioneers, liquor wholesalers, breweries, wineries, salespersons and agents, Class G (boat/airline/railroads) license holders, line-cleaners, and mobile and manufactured homes and parks. The enforcement of unit pricing, motor fuel advertising and health club pre-opening laws are also activities of this program.

The Alberta Energy Regulator (AER) is a quasi-judicial, independent agency regulating the development of energy resources in Alberta. Headquartered in Calgary, Alberta, the AER's mandate under the Responsible Energy Development Act (REDA) is "to provide for the efficient, safe, orderly and environmentally responsible development of energy resources and mineral resources in Alberta.”

The Malta Gaming Authority (MGA), formerly the Lotteries and Gaming Authority (LGA), is the gaming control board of Malta. It regulates most forms of gambling in its territory, including both land-based and online gambling services including B2C and B2B services.

References

↑ Select Committee on Science and Technology Sixth Report (2000). "CHAPTER 5: REGULATION - Voluntary Self-Regulation". www.parliament.uk. Retrieved 2023-11-06.
↑ "Regulation and Co-regulation". Advertising Standards Authority. Retrieved 2023-11-13.
↑ Better Regulation Delivery Office (2014). "Regulators' Code" (PDF). Department for Business Innovation & Skills. Retrieved 2023-11-06.
↑ National Audit Office (2017). "A Short Guide to Regulation" (PDF). National Audit Office. Retrieved 2023-11-06.
↑ Office of the Superintendent of Professional Governance British Columbia. "Duties of Regulatory Bodies". Office of the Superintendent of Professional Governance. Retrieved 2023-11-06.
↑ Blomgran Bingham, Lisa (2009). "Collaborative Governance: Emerging Practices and the Incomplete Legal Framework for Public and Stakeholder Voice" (PDF). Journal of Dispute Resolution (2).
1 2 Van Loo, Rory (2018). "Regulatory Monitors: Policing Firms in the Compliance Era". Columbia Law Review.

Notes

Jordana J, Fernández-i-Marín X, Bianculli A (2018). "Agency proliferation and the globalization of the regulatory state: Introducing a data set on the institutional features of regulatory agencies". Regulation & Governance. 12 (4): 524–540. doi:10.1111/rego.12189. hdl: 10230/46637 .
Kohlmeier, Louis M. Jr. (1969). The Regulators: Watchdog Agencies and the Public Interest. New York: Harper & Row. ISBN 978-0-06-043747-3.
Quirk, Paul J. (2014). Industry Influence in Federal Regulatory Agencies. Princeton, NJ: Princeton University Press. ISBN 9781400854318.

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[1] Select Committee on Science and Technology Sixth Report (2000). "CHAPTER 5: REGULATION - Voluntary Self-Regulation". www.parliament.uk. Retrieved 2023-11-06.

[2] "Regulation and Co-regulation". Advertising Standards Authority. Retrieved 2023-11-13.

[3] Better Regulation Delivery Office (2014). "Regulators' Code" (PDF). Department for Business Innovation & Skills. Retrieved 2023-11-06.

[4] National Audit Office (2017). "A Short Guide to Regulation" (PDF). National Audit Office. Retrieved 2023-11-06.

[5] Office of the Superintendent of Professional Governance British Columbia. "Duties of Regulatory Bodies". Office of the Superintendent of Professional Governance. Retrieved 2023-11-06.

[6] Blomgran Bingham, Lisa (2009). "Collaborative Governance: Emerging Practices and the Incomplete Legal Framework for Public and Stakeholder Voice" (PDF). Journal of Dispute Resolution (2).

[CLR-7] 1 2 Van Loo, Rory (2018). "Regulatory Monitors: Policing Firms in the Compliance Era". Columbia Law Review.

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