Regulatory Agency

A regulatory agency (also regulatory authority, regulatory body or regulator) is a public authority or government agency responsible for exercising autonomous authority over some area of human activity in a regulatory or supervisory capacity. An independent regulatory agency is a regulatory agency that is independent from other branches or arms of the government.

Regulatory authorities are commonly set up to enforce safety and standards, and/or to protect consumers in markets where there is a lack of effective competition or the potential for the undue exercise of market power. 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 are typically 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 generally open to legal review.

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 supervisory 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.


In some instances, regulatory bodies have powers to require that companies or organizations operating within a particular industry adhere to certain standards or deliver a set of outputs ex ante. This type of regulation is particularly common in the provision of public utilities which are subject to economic regulation. Regulatory bodies in this area will:

  • require individuals, companies or organizations entering the industry to obtain a license; and
  • set price controls and require the provision of particular service levels.

In most cases, regulatory agencies have powers to the use some of the following ex post mechanisms:

  • require transparency of information and decision-making on part of the regulated company or organization;
  • monitor the performance and compliance of the regulated company or organization, with the regulator publishing the findings of its investigations;
  • require that administrators give reasons explaining their actions, and have followed principles that promote non-arbitrary and responsive decisions;
  • undertake enforcement action, such directing the company to comply through orders, the imposition of financial penalties and/or the revocation of a license to operate; and
  • arrangements for review of administrative decisions by courts or other bodies such as competition authorities.


See also


  This article uses material from the Wikipedia page available here. It is released under the Creative Commons Attribution-Share-Alike License 3.0.



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