Regulation

Question 1

Principal aims of regulation

Answer 1

(FCPCP)
Help reduce fraud
Maintain confidence in the financial system
Protect consumers of financial products
Correct perceived inefficiencies and promote efficient and irdely markets

Question 2

Direct costs of regulation (ANS time and money)

Answer 2

Time to administer the regulation
Compliance for the regulated firms

Question 3

Indirect cost of regulation (the impact on the market)

Answer 3

(CIRUA)
Reduced competition – All products will be the same
Reduced product innovation – They will be a lot of limits imposed by the regulator
Reduction in consumer production mechanisms developed by the marker itself
An undermining of the sense of professional responsibility among intermediaries and advisors
An alteration in the behavior of consumers

Question 4

Functions of a regulator

Answer 4

(VISEP
Vetting and registration of firms and individuals authorized to conduct certain types of business
Influencing and reviewing the government policy
Supervising the prudential management and conduct of financial organizations
Enforcing regulations, investigating suspected breaches and imposing sanctions
Providing information to consumers and the public.