OpinionApr 14 2014

Adviser Rant: Self-regulation can indeed work

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Are you at all surprised that the MPs on the House of Commons’ Standards Committee decided to apply, what looked to me, to be a more lenient set of standards to one of their peers than an equivalent independent body might have?

No, neither am I.

The debate over culture secretary Maria Miller’s expenses has highlighted how ineffective a system of self-regulation can be.

It was for similar reasons all those years ago that the financial services sector was told self-regulation was no longer an option. Yet I’m not 100 per cent convinced that statutory regulation is the be-all and end-all.

Under the current system the question arises, ‘Who regulates the regulator?’ – and this is a problem.

If we could do it all again I think we could make self-regulation work more effectively than statutory regulation. Under the current system the question arises, ‘Who regulates the regulator?’ – and this is a problem.

Financial services could self-regulate with a small, overarching regulatory body overseeing self-regulatory organisations – yes, we’ve done that already. It allows the inherent knowledge and expertise within a sector to be properly consulted and utilised, while maintaining public trust through a body to ensure standards were applied and maintained.

Whether it’s statutory or self-regulation, the present system doesn’t work all that well and is overly expensive. Something needs to change.

Dennis Hall is managing director at Yellowtail Financial Planning