How Effective is Regulation in the Financial Sector

For all the laws, rules and regulations we’ve generally set in place as the human race, the rate at which these regulations are being constantly broken suggests that we’re getting a lot of things wrong. How many people are incarcerated worldwide, for example and how many people get fines for breaking road rules? One can always point at the sheer numbers of prisoners as perhaps an indication of a system that is in fact working, but since the primary aim of laws, rules and regulations is to prevent certain things from happening, an equally good case could be made that those regulations are in fact failing dismally.

The financial sector is one which is rather heavily regulated and one which makes for the topic of discussion today. Is regulation in the financial sector effective considering just how often things turn out quite badly? Perhaps a better question to ask is indeed just how effective regulation in the financial sector really is?

When the question is phrased in this way and one takes a closer look at the inner-workings of the financial sector, it becomes apparent that a different set of laws seems to apply to different players making up the financial sector. I mean what happens to you when you miss a payment on your monthly insurance premiums, perhaps with very legitimate reasons an ordinary human being with feelings would understand and be sympathetic to? The answer is something bad — you probably miss out on the benefits you’ve been building up enjoying access to over all the months you’ve actually been able to pay your premiums without any problems.

Flip the script and ask a similar question of the financial institutions sitting on the other side of the fence. What happens when the institution gets found out to have committed financial fraud through something like opening phony bank accounts and then issuing loans on those accounts to execute what are effectively fraudulent trades? The answer is nothing happens. Taxpayers foot the bill in the form of government bailouts for what are incidents which get isolated and labelled as the work ‘rogue traders’ when in fact the institutions themselves probably went beyond turning a blind eye to these rogue practices and actually encouraging them.

So yes, regulation in the financial sector is very effective, but it’s not fair at all. Regulation in the financial sector only works in the favour of the big financial institutions and only really works in the favour of the average consumer if there’s just no other way of getting around the injustice which would otherwise befall these consumers.

All’s not lost however because there are specialists such as Stanton Fisher fighting very hard in the corner of the little consumers who don’t quite know the power which they hold in their hands. With these types of companies specialising in financial claims on behalf of consumers who may not even know they qualify for compensation, the regulation of the financial sector becomes that much more effective, this time balancing the scales out a bit in favour of the consumers.

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