S/F/19. Financial Service Regulation

Like any other industry, users of financial products and services need protection against dishonest traders and substandard products and services. Since it is difficult to judge a financial product from the look or the feel, it is only reasonable to have rules regarding the nature of products on offer. Financial markets today are the biggest markets in the world. It can be judged from the fact that only in the foreign exchange market, trading is more than $1 trillion in a single day. Hence it is ideal to have rules governing the general operations of these markets, for the professionals who trade in them and the vendors of investment products. The main essence of these rules is to protect investors as well as depositors and to preserve financial stability. Haynes (2002) discloses that the financial service sector is the most closely regulated sector world wide compared to most other industries with the exception of those that affect people's health and safety. The main aim of this paper is to identify the various forms of financial service regulation in the UK taking into account the different regulation agencies. Understanding the reasons for and against regulating the financial services in the UK. Analysing regulation in term of specific companies looking into the costs and benefits.