Eric Reicin, President & CEO of BBB National Programs, a nonprofit organization dedicated to a more accountable, trustworthy marketplace.
In industries where government oversight is extensive—such as financial services, pharmaceuticals, freight rail and insurance—the idea of industry self-regulation may seem unnecessary or redundant. But in practice, industry self-regulation is not a substitute for government action; it is a strategic complement. And when done right, industry self-regulation enhances compliance, accelerates innovation and builds public trust.
At BBB National Programs, we have seen firsthand how independent self-regulatory systems can fill gaps, respond faster than regulatory processes and promote ethical standards that go beyond what the law requires. And I have noticed that some of the most effective self-regulatory models operate within industries already governed by robust legal frameworks—so-called “highly regulated industries.” Even the nuclear power industry has several self-regulatory bodies, such as the Institute of Nuclear Power Operations (INPO).
Why Independent Industry Self-Regulation Matters
Industry self-regulation is often misunderstood as a strategy to avoid oversight. In reality, it is a proactive mechanism that allows participating industries to adapt quickly to technological and market changes, reinforce accountability through peer-driven standards and collaborate with regulators to strengthen consumer protections.
In highly regulated sectors, self-regulation adds a layer of agility and ethical leadership that government alone cannot provide.
Financial Services: FINRA’s Hybrid Model
Though certainly a highly regulated industry, there are many self-regulatory mechanisms within the financial sector, such as those managed by the CFA Institute, a long-standing group of chartered financial analysts, and the Receivables Management Association International (RMAI) (full disclosure: Leaders at BBB National Programs serve on an appellate board for RMAI).
The longest-running example is the Financial Industry Regulatory Authority (FINRA). Though not a government agency, FINRA oversees brokerage firms and exchange markets, enforcing rules that promote market integrity and investor protection. It works in tandem with the Securities and Exchange Commission (SEC), conducting audits, disciplining violators and updating standards more swiftly than legislation allows.
This hybrid model—government oversight plus industry-led enforcement—creates a robust system of checks, balances and dispute resolution. There are many points of view when it comes to what FINRA is, but even the self-regulatory body’s harshest critics would acknowledge that its peer-review approach encourages firms to aspire to best practices.
Pharmaceuticals: Ethics Beyond Compliance
In the pharmaceutical sector, industry self-regulation can play a critical role in governing how companies promote medicines and interact with healthcare professionals.
Some observers have opined that industry self-regulation is a distinctly American phenomenon. However, the European Federation of Pharmaceutical Industries and Associations (EFPIA), for example, has a self-regulatory component through its enforcement of a code of conduct that often exceeds legal requirements. Member associations around the world, including the Prescription Medicines Code of Practice Authority (PMCPA) in the U.K., impose sanctions for violations, including fines and public reprimands.
No matter the geography, pharmaceutical companies have faced the perennial question of how the industry can build trust. One possible answer is by utilizing industry self-regulation to set ethical standards that prioritize patient safety and transparency and encourage good advertising practices.
Freight Rail: Safety Through Industry Expertise
Freight rail is another sector where self-regulation complements federal oversight. Organizations such as the Association of American Railroads (AAR) develop and enforce safety standards, encourage self-inspections and share data. As a recent railroad industry white paper published by our Center for Industry Self-Regulation demonstrates, these efforts support the Federal Railroad Administration’s mission while allowing the industry to innovate in areas like predictive maintenance.
Because rail operators understand the nuances of their systems better than any external regulator, they are better positioned to identify risks and implement solutions, making self-regulation a powerful tool for safety and efficiency.
Insurance: Codes Of Conduct And Consumer Trust
In the insurance industry, self-regulation often takes the form of codes of conduct enforced by trade associations and related entities, such as the licensing center of the National Insurance Producer Registry (NIPR). These codes address issues like fair marketing, claims handling and data privacy.
Eighty years ago, the McCarran-Ferguson Act reaffirmed the important role of states in regulating insurance. The National Association of Insurance Commissioners (NAIC), in working closely with state regulators, also promotes national self-regulatory initiatives that enhance consumer protection.
By encouraging insurers to adopt best practices, self-regulation helps maintain market stability and reduces the need for enforcement. And as noted by the American Academy of Actuaries, safeguarding self-regulation is especially important in an industry where state laws and regulations play such an important role.
What Makes Self-Regulation Work?
The success of self-regulation in highly-regulated sectors depends on:
1. Credible Enforcement: Independent oversight and meaningful consequences for noncompliance are essential.
2. Transparency: Public reporting and stakeholder engagement build trust.
3. Alignment With Public Policy: Standards complement—rather than conflict with—government objectives.
4. Continuous Improvement: Self-regulation must evolve with the market, incorporating new technologies and consumer expectations.
At BBB National Programs, we turn these principles into action across more than 20 industry self-regulation programs. From truth-in-advertising and dispute resolution to children’s privacy and AI, our work demonstrates that self-regulation can be rigorous, responsive and respected.
Rather than viewing self-regulation and government oversight as opposing forces, we have always encouraged industry players to embrace them as partners. I have observed that many of the effective regulatory ecosystems combine public governance with private initiative. This hybrid model enables flexibility without sacrificing accountability.
As I have written previously, industry self-regulation is essential, especially in sectors where innovation outpaces legislation. Whether it is agentic AI, where I asked "How can we govern it without stifling innovation?", or data privacy compliance, where I described the Cross Border Privacy Rules—a voluntary, enforceable privacy certification that businesses can use to demonstrate compliance with internationally recognized data privacy standards—effective industry self-regulation is critical to enhancing consumer trust in business.
Strengthening Oversight And Innovation
Industry self-regulation is a powerful tool. In highly regulated sectors, it offers a way to enhance oversight (particularly safety and consumer risk mitigation), foster innovation and promote competition. As we navigate an increasingly complex marketplace, we must invest in credible self-regulatory systems that work in tandem with government agencies.
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