Regulatory policy refers to the set of rules, procedures and institutions introduced by government for the express purpose of developing, administering and reviewing regulation (both primary and subordinate). OECD member countries have acknowledged the critical importance of regulatory policy and made substancial efforts to ensure that regulations are of high quality and fit-for-purpose. The financial and economic crisis of 2008 has reinforced the need and highlighted the importance of a well-functioning regulatory framework for transparent and efficient markets with the right incentives. Fair, transparent and clear regulatory frameworks serve also as a sine qua non basic condition for dealing effectively with environmental and social challenges in a society. Good regulatory practices and institutions can also help address global challenges and harness globalisation through more coherent and shared rules.

The central objective of regulatory policy is to ensure that regulations are designed and implemented in the public interest. It can only be achieved with help from those concerned: citizens, businesses, civil society, public sector organisations, etc. The 2012 OECD Recommendation on Regulatory Policy and Governance recommends that governments actively engage … all relevant stakeholders during the regulation-making process and design … consultation processes to maximise the quality of the information received and its effectiveness (OECD, forthcoming). OECD member countries acknowledge the importance of listening to the voice of users, who need to be part of the regulatory development process. Moreover, stakeholder engagement is commonly considered as a key element of an open government policy.

Regulatory Impact Analysis (RIA) is the systematic process of identification and quantification of benefits and costs likely to flow from regulatory or non-regulatory options for a policy under consideration. Countries apply a variety of analytic techniques as part of the RIA process, including cost-benefit analysis, cost-effective analysis, and multi--criteria analysis. RIA represents a core tool for ensuring the quality of new regulations through an evidence-based process for decision making. A well-functioning RIA system can assist in promoting policy coherence by making transparent the trade-offs inherent in regulatory proposals. RIA improves the use of evidence in policy making and reduces the incidence of regulatory failure arising from regulating when there is no case for doing so, or failing to regulate when there is a clear need. The process fosters integrity and trust in the regulation-making system through levers of transparency and accountability by disclosing the development process of the regulation. Yet, despite being one of the tools most widely adopted internationally as part of regulatory policy, effective implementation of RIA remains elusive in many cases. This is evidenced, for instance, by the existing gap between the legal mandate to conduct RIA and its actual practice and the limited number of countries that ensure that regulations guarantee a net benefit to society ().

The evaluation of existing laws and regulations through ex post impact analysis is necessary to ensure that they are effective and efficient. In the absence of a systematic review process, the overall burden of complying with regulations tends to increase over time. This complicates the daily life of citizens and impedes the efficient functioning of business. Ex post evaluation can be the final stage of the regulatory policy cycle, evaluating the extent to which regulations met the goals they were designed for. It can also be the initial point to understand the impacts, shortcomings and advantages of a policy or regulation in place, and to provide feedback for the design of new regulations.

Regulators are bodies that are empowered by law and have regulatory powers to achieve policy outcomes such as the security of food, public health or the provision of electricity or water to consumers. They play a key role in the overall governance of a sector, service or industry through the delivery of government policies and regulations to achieve positive outcomes for society, the environment and the economy. Having the right governance structures, good regulatory practices and institutional arrangements in place is not only important for the performance of the regulator, but it also assists to create and maintain trust in public institutions and more generally in the rule of law. This includes the regulator’s legal objectives, powers, accountability requirements and the regulator’s independence from undue influence.