Difference Between Statutory and Regulatory Requirements

“It is not our differences that divide us. It is our ability to recognize, accept and celebrate those differences.” ― Audre Lorde

Introduction

The currency of any country is a legal tender against which anything can be purchased. The law of the land is to be followed by all the citizens of the country. It is the responsibility of the citizen to know the legal requirements while it is the responsibility of the legal body to make the information accessible to all the relevant interested parties. Example: Legal agencies should communicate about the use of seat belts to all citizens but the driver of the car can not say that since nobody communicated it to me personally, I will not wear the seat belt!

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Content: Scrap / Salvage

What is the Statutory Requirement?
What is Regulatory Requirement?
What is the key difference?
Conclusion

Objective

Both statutory requirements and regulatory requirements are those requirements that are required by law. These requirements are non-negotiable and must be complied with. Failure to comply with a legal requirement may result in a fine or penalty and possibly a custodial sentence for the person or persons responsible or organization for such failure.

Once you read this blog, you will understand, what is Statutory requirement, what is Regulatory Requirement, what it’s the purpose of it and what are the key differences.

Definition: ISO 9000: 2015

Requirements (Cl 3.6.4): Need or expectation that is stated, generally implied or obligatory

Statutory Requirement (Cl 3.6.6): Obligatory requirements specified by a legislative body

Regulatory Requirements (Cl 3.6.7): Obligatory requirements specified by an authority mandated by a legislative body

Detailed Information

Top Management should demonstrate leadership & commitment by ensuring compliance with the requirements. It should be the responsibility of the personnel/functions concerned to meet these determined requirements. The top management should also review at defined intervals meeting applicable statutory and regulatory requirements.

Meeting the applicable statutory and regulatory requirements in addition to the customer requirements is the first step towards customer focus (First QMS Principle) for any organization.

When a customer buys a product or a service from an organization, they seek a sustaining relationship and a long-term association with the organization. If for any reason, the legal requirements are not met, then it results in the loss of existing customers as well as potential customers. The company brand image will be tarnished, company credibility will be at stake and share value will decrease as a consequence. This is especially important when it is related to compliance with legal requirements (statutory and regulatory requirements). Customers expect their suppliers to be ethical in all their dealings and effect conserve the environment.

The term “statutory and regulatory requirements” appear in IATF 16949 and ISO 9001: 2015 Standard 18 times. These two requirements together are also called legal requirements.

Clause	Requirement	Example
4.4.1.2	Product Safety	Emission Norms
7.5.3.2.1	Record Retention	Record of the Euro VI Norms implementation during development and mass production
8.2.2	Determining the Requirements for Products and Services	ELV Requirements
8.3.3.1	Product Design Input	Emission norms requirements of the country for which the product is designed
8.4.2.2	Statutory and Regulatory Requirements	Country of receipt (India), Country of shipment (Germany), the customer-identified country of destination (Japan/USA)
8.5.5	Post-delivery Activities	How to dispose of Tyres and Lithium-Ion Batteries

The difference between statutory and regulatory requirements is a subtle one. In general, a statutory requirement is an established rule by law, like copyright, trademark protections, Sarbanes-Oxley Act (SOX). A regulatory requirement is established by government agencies.

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What are the Key Differences?

Although the terminology of Statutory and Regulatory requirements is quite similar and often it is being used interchangeably, still there are a few differences between them.

S.No.	Statutory Requirements	Regulatory Requirements
1	Obligatory requirements specified by a legislative body (ISO 9000: 2015, Cl: 3.6.6)	Obligatory requirements specified by an authority mandated by a legislative body (ISO 9000: 2015, Cl: 3.6.7)
2	Statutory requirements derive from legislation that has been enacted into law	Regulatory is a term used to describe the regulation of law. When a law is created and later enforced, it is termed as regulatory. Regulatory requirements are enforced by regulators such as OSHA or EPA
3	The statute is the law and is often general	Regulations are the rules developed to interpret the laws and are often more specific so that they can be implemented
4	It is followed by the citizens of a country	It is followed by the citizens of a particular region or area.
5	Statutory requirements are often backed up by criminal penalties for noncompliance	Regulatory requirements do not carry such penalties.
6	Statutory laws provide the framework and overarching principles	Regulatory laws detail specific rules and requirements.
7	Statutory requirements cannot change easily as they require legislative action	Regulatory laws can be changed more easily than statutory laws, as they don’t require legislative action
8	It is an independent law.	It takes inspiration from statutory laws.
9	Members of parliament can be involved in its execution.	It is executed by lawyers and officials.
10	It has a long process for its execution.	It takes a shorter time to be passed.
11	Example: A statute may say that “excessive levels of certain pollutants” shall not be permitted in or near major bodies of water or something similar	Example: The Environmental Protection Agency (EPA) might issue ‘Regulations’ that determine what ‘excessive levels’ and “major bodies of water” are as well as its plan for enforcement to fulfill the expectations of Statute
12	Example: Educational System developed and passed in the parliament of India is a statutory requirement.	Example: Controls applied by the Directorate of Controller of Examinations to institutions are a regulatory requirement
13	Example: Companies Act 2013 (amendment bill 2015) and Motor Vehicles Act 1988 (amendment bill 2016) are a statutory requirement	Example: ARAI (Automotive Research Association of India) is a regulatory body responsible for the car mileage figure in India
14	Example: Indian Boilers Act 1923 passed by the Government of India is a Statutory Requirement	Example: Central Boilers Board was constituted to develop regulations as Indian Boiler Regulations 1950 which govern and is responsible for Boiler Industries. This is a regulatory requirement by a board constituted under the Act.

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References:

ISO 9001: 2015

ISO 9002: 2016

ISO 9004: 2018

IATF 16949: 2016

Industry Experts

This is the 189^th article of this Quality Management series. Every weekend, you will find useful information that will make your Management System journey Productive. Please share it with your colleagues too.

In the words of Albert Einstein, “The important thing is never to stop questioning.” I invite you to ask anything about the above subject. Questions and answers are the lifeblood of learning, and we are all learning. I will answer all questions to the best of my ability and promise to keep personal information confidential.

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