reason for Financial Services Regulation

Only available on StudyMode
  • Download(s) : 29
  • Published : March 22, 2014
Open Document
Text Preview
Financial services have complex and evolving regulations. They trigger major programs of regulatory at national, regional and global level. These laws and regulations are essentially publicized by government regulators and international groups for a number of reason. Fundamentally, the rules are in place in order to protect customers. After the financial crisis in 2008/2009, action has been taken in making sure that the financial sector manages and contains these risks more effectively. If anyone has a bank account or a loan with a financial institution, they are a consumer of financial services. In addition to that, not only does it protect the interests of customers but as well of the economy as a whole. The financial markets every now and then will provide reasonable yields on the investment for everyone, however at other times a small number of financiers will generate above average returns on their investment. Furthermore, the presence of law scrutinizes and fills gaps in the financial sector. Banks or insurance companies are scrutinized by the regulating bodies to ensure adequate capital is maintained so that they do not become solvent. The primary reason behind such assessments is for a smooth and efficient market to run, while it is tough to define where such a market efficiency line falls, it can be concluded the markets are neither 100% efficient nor 100% inefficient. Adding on, scrutiny over the financial services helps to safeguard any foreseeable difficulties in the market. Ruling recommends to identify risks and frauds, managing those risks and fraud and trying to improve compliance. This suggests they tend to be proactive rather than reactive. Lastly, swiftly fluctuating marketplace, evolving consumer demands, shifting demographics and technology changes has promoted regulatory bodies to construct robust supervision and regulation of financial firms to make certain that complex financial products are not misused and sold wrongly to customers....
tracking img