As it stands today, the cosmetic industry is a self-regulated industry. The FDA does not require pre-approval before a product can go to market. 
This might make sense in a free market economy, but what about ingredients like formaldehyde, phthalates, and ethanolamine compounds? These ingredients are known to have harmful effects on biological systems. However, you can still find them on shampoo and lotion labels at your local drug store. Pretty much without even trying, actually. They may be listed as "quaternium-15" or, "cocamide DEA (from coconuts)."
Cosmetic companies are also not legally required to register with the FDA or file all customer reports of adverse effects like in many other major industries.
Although the FDA states on their site that "companies and individuals who manufacture or market cosmetics have a legal responsibility to ensure the safety of their products," it also states that "neither the law nor FDA regulations require specific tests to demonstrate the safety of individual products or ingredients. The law also does not require cosmetic companies to share their safety information with FDA."
So, we have a 80 billion dollar U.S. cosmetic industry distributing things like baby shampoo and lipstick to the masses and it's self-policing the safety of it's own ingredients.
While the FDA does have authority to enforce laws outlined in 1938 by the FD&C Act, the toxicology research for ingredients such as "Methylisothiazolinone" is left up to the Cosmetic Ingredient Review Panel.
The group's website (cir-safety.org) "about" page offers up the following information:
"The Cosmetic Ingredient Review was established in 1976 by the industry trade association (then the Cosmetic, Toiletry, and Fragrance Association, now the Personal Care Products Council), with the support of the U.S. Food and Drug Administration and the Consumer Federation of America. Although funded by the Council, CIR and the review process are independent from the Council and the cosmetics industry. CIR operates under a set of procedures."
Although the wording on their website tries it's hardest to convince you that research conducted by the CIR is un-biased and expert, it doesn't change the fact that the big dog cosmetic companies are running their show.
So who exactly are these companies? They are the 600 member companies of the Personal Care Products Council (PCPC). Remember, this is the organization supposedly "committed to product safety, quality, and innovation" that also founded and is funding the CIR. Their member list is public if you would like to take a look.
But wait, it gets worse.
You know how when you read a product's ingredient label, the names sound way more complicated than they need to be? For example, corn starch is listed as "zea mays" or baking soda is listed as "sodium bicarbonate." This because of the International Nomenclature Cosmetic Ingredient (INCI) names. It is a system developed by the International Nomenclature Committee (INC), dedicated to making ingredients transparently and easily recognizable across the world.
Well, it just so happens that INCI names are published by the PCPC. The word "published" insinuates that maybe the ingredients were reviewed and edited before being made public . Interesting.
I use the word "public" very loosely, by the way. None of the CIR ingredient studies or even the list of INCI names are public. You have to apply to their committees and pay a fee before gaining access.
Stay safe out there,