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Aregulatory agency (regulatory body, regulator) or independent agency (independent regulatory agency) is a government authority that is responsible for exercising autonomous dominion 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 AuthorityinIndia.
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.
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]
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:
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:
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]