The operations of the financial institutions are regulated, and they are subjected to specific requirements, guidelines, and restrictions. Regulation is necessary to make sure that there is integrity. The critical player in the financial regulations is the government. At personal levels, peoples like Chris Brummer have also played a vital role in the transformation of the financial systems. One more reason that has to lead to the need for regulations is because of very many financial products that have emerged.
One of the reasons why the economy of a nation tend to unstable us due to lack of rules. The government need to regulate the financial system since everybody depends on it strictly. The first objective of the rules is to ensure that there is the confidence of the system. It also aims at ensuring that the financial system is stable and protected. The consumers also have to receive a high h degree of protections. It is worth noting that the consumer will be unfairly treated; for example being overcharged on the credit cards.
Banking and the service providers are the most regulated institutions. They set standards under which they are created. They must operate with stringent guidelines. The result is a robust and efficient banking system since there is no unwelcomed development that may disrupt the smooth running of the banking industry. Also, the regulations also applied to the investment management.
The listed companies have also to be put under strict rules. They are supposed to annually publish their financial reports and make them available to their shareholders. The move is meant to benefit the investors; they have sufficient information that that can use to make informed decisions about their financial securities. There are financial, and security professionals like Chris Brummer has participated in ensuring that the investors are safe. One more thing has had been put under rules is stock exchange market; the exchange should be conducted correctly to ensure that there are smooth operations.
Every company that deals with finances must ensure that they abide with the rules that have been set by the government; if they do not, they will face various consequences. Before you begin offering financial services, the first step is to ensure that you understand the rules and the laws. You are then required to implement them in your organization. There are two things that can be done when the financial institutions are not compliant with the standards. First it can face enforcement proceedings. In other situations, the firm can be restructured or winded down.
Financial regulations should be improved regularly. The aim is to ensure that the nation is safe. New financial products are created constantly, and thus there is need for new regulations to include them. Bill need to be introduced to strengthen the regulations.