Self Regulation In Financial Sector

Financial regulation is a form of regulation or supervision of the financial services industry, aiming to maintain the integrity of the financial system. Deregulation was experienced mainly in the worlds of banking and building societies, also affected the structure of banking sectors. To some degree, self-regulation caused a lot of adverse effects on consumers, it aroused a hot topic for people on consumer protection. Split capital investment trusts are investment trusts that companies raise funds to invest in other companies. They can benefit from both dividend income and capital growth. However, when share prices suddenly decrease, many trusts did not have enough money to pay, some trusts borrowed heavily to buy more shares. A lot of people

Due to increase the cost of capital to borrowers by increasing the cost of finance, increase unit costs of production in the financial sector, it is obviously raise the input but produce less than estimated. In other words, increase the unit of producing financial services, which increases the cost of using services. The reasons why it will cause a great mount of cost can be argued for self-regulation with two factors. The first one is the industry has a commercial incentive to defend its fame and members are prepared to pay to achieve this. The second one is that practitioners know the demand of the industry and are likely to interfere less with its functioning. This refers to a general complaint against statutory regulators that, as they are heavily criticized over the collapse of firms rather than praise for actions that result in lower prices, they attempt to increase excessive safety standards, raising the cost of regulation to both producers and

There are a number of codes of practice, developed by industry bodies and trade associations that set out the standards for behaviour expected from their members. (Brighouse & Hontoir, 2004) Other rationales for financial regulation are also commonly advanced, with different emphases in different countries. In addition, in the US, there are strong historical roots of financial institution that people have no faith in, many kinds of regulation have been proved as necessary to protect consumers from excessive price and discrimination; to prevent an undue concentration of economic and even political power, and to encourage the allocation of credit to favoured industries, activities, and regions. Its therefore seems that none of the criticisms point out sufficient reason to deny all self-regulation, it is better to take into account all of the factors in decision making over the amount and form of