Regulation - Do we really need any more?

By Advertiser, in Business · 09-08-2018 11:43:00 · 0 Comments

It is 10 years on since the crash of the financial markets in 2008. Whilst there has been some remarkable recovery, regulation is reborn as the new bad boy on the block.

From GDPR to new anti-money laundering, lawmakers would appear to be unintentionally restricting new and existing consumers.
But is that really the case and, if so, why then is regulation necessary?
Regulations are designed to create a sense of trust and confidence, particularly when things go wrong. If people do not trust their banks and other fields of the financial services industry, then, in simplicity, they don’t invest or deposit their money. If everyone hived away their savings under their mattress instead of depositing their money in banks or investing that money, then that money is taken out of circulation and becomes idle. Subsequently the economy crashes because money becomes scarce and the value of the available money goes up (inflation) until people cannot afford to have money. Essentially, without trust in banks or financial services you flip from boom to bust.

The trade-off is that there has to be sufficient regulations to ensure the safety and soundness of the banking system and financial services, but not so much regulatory oversight that it inhibits operations and innovation.
Looking after clients with regards to their finances, in both a spoken and written language that they understand, requires a system of regulation that protects consumers and the financial services industry alike. The livelihood of the client and their service providers can’t simply be born out of regulation and salesmanship. To be blunt, the essential elements to solidify a flagship regulatory platform together is credibility, integrity and ethics.
Some argue that regulation is impersonal and breeds contempt. But as a professional adviser, I argue that having regulation is a necessary focus. Without it, you have no recourse or support to back you up when things go wrong and, therefore, the professional adviser should be able to clearly explain what rights you have before things do go awry. For the consumer it is essential that not only should your adviser explain matters clearly and in layman’s terms, that you also undertake your own due diligence with their regulator, their company and ask questions that not only makes your adviser uncomfortable, but could make you think twice. After all, whilst the regulation is for the here and now, you want to make sure your adviser remains by your side, clearly working in your best interests, whatever happens tomorrow or whenever the next crisis hits your finances.

This article is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investments or course of action.
Raoul Ruiz Martinez is a resident and independent consultant for Finesco Financial Services Ltd., Glasgow and advises clients on private financial matters in both the UK and throughout Europe under the MiFID regulation. Finesco Financial Services Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Some of the services provided are not regulated by the FCA because they are not included within the Financial Services and Markets Act 2000. Raoul has a weekly radio feature (Raoul’s Rant) on the Owen Gee Solid Gold Sunday Morning Show as well as the Money Minute programme on the weekly Si Frater’s Breakfast Show, both on KissFM Portugal.


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