The Higher Education Commission has put forward a set of policy recommendations to "better protect students and the image of higher education in England" after years of reforms have transformed the HE sector.
The Higher Education Commission is an independent body made up of leaders from the education sector, the business community and the three major political parties.
The Government has set out plans to create a more demand-led HE system, with liberalised student number controls and a new funding system.
New providers are entering the sector and existing institutions are diversifying their offer.
Simultaneously, HE continues to become more globalised with numerous online platforms launched and universities from across the world establishing branches in the UK.
Lord Norton of Louth and Professor Roger King, co-chairs of the Commission's inquiry, said the way in which the sector is regulated is fundamental to its health and success.
"It can make or break the effectiveness of the institutions that have made the UK a world leader in higher education," they wrote.
"In the context of current reforms, the absence of legislation to provide a coherent regulatory architecture for the rapidly changing and increasingly dynamic sector is creating major headaches for its players. It is a situation crying out course of the inquiry from those who gave evidence.
"The inquiry has been anxious throughout its review to regard regulation as more than simply a matter of compliance and standards."
The proposals seek more external and formalised external regulatory arrangements and the continuation of pluralism rather than centralisation features.
The Commission wants "a more systematic and less piecemeal approach to the external regulation of the sector" vis legislation.
"We conclude that pluralist risk based regulation is a great enabler, and will allow the higher education sector to flourish and innovate during this period of great change, whilst ensuring students, taxpayers, universities and businesses are protected.
"We are not recommending regulation for regulation’s sake or defending mission-creep in the public sector.
"We believe that getting the regulatory architecture for higher education right is fundamental to the success and reputation of our sector."