Regulating for whose benefit?
Regulators say they are acting for the benefit of investors, but the investors haven't actually been asked, according to leading international investment expert, Anthony Neoh QC.
Neoh, who is on the international advisory committee of China Securities, has told a CFA Institute breakfast that despite improvements in regulation, the big question remains about who actually benefits.
"Regulators say they are for investors, whereas institutions say they are for the benefit of the regulators, and not for investors at all," he said.
"In my view, the question of who it is all being done for is not in fact the right question. The right question is what is being done to fulfil the needs of the people who are investing? That question hasn't been asked."
"Regulators say they are acting for the benefit of investors, but the investors haven't actually been asked," Neoh said.
Neoh also noted the manner in which, during the global financial crisis, complex financial instruments had been sold to the general public as low risk and had not been understood by those buying them.
"Regulators have made significant efforts to enforce stricter business and market regulation rules to deal with this, but in my view, they have approached the problem in a very ‘mechanical', or what I would describe as ‘box ticking' way," he said.
"By this I mean that a great many standard warnings and rules must now be presented to investors, and the problem is that the rules are so rigid, and the banks so terrified of contravening them, that they stick to them mechanically."
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