Too Much Regulation?

It’s an interesting topic and one I know Chris Owers – Global Head of Regulatory Compliance Solutions is going to be writing on: in the wake of the new Trump administration the momentum of the regulatory train has hit the buffers, at least in America. Everywhere else, particularly in Europe, regulation feels like it has become an industry. There are people dedicated to Mifid so to justify their existence they create Mifid 27 – I am being typically facetious to make a point but this is happening everywhere with administrators imposing costs of compliance for outcomes that are now going to be called into question.

Regulators and governments getting involved with technology is another issue where good intentions or just interference have unintended consequences. To give you an example, the EU, in their infinite wisdom, have legislated to standardise charging ports on phones – it is now illegal to sell a phone in Europe without a USB-C charging port. I know why they did it and industry standards can be a good thing so long as they don’t get in the way of innovation. Oppo is shipping a phone so thin it barely has room for a USB-C port. How long before Apple or Samsung create a phone where they need to invent a USB-D/E/F to accommodate the slim design? iPhone Air anyone? Not if you live in Europe.

2 Weeks ago Emmanuel Macron held an international summit in Paris with countries signing up to a Charter on Artificial Intelligence in the Public Interest. The US and the UK both refused to sign. Do we really need government interference at this stage of AI development? We are still learning what might be possible yet governments are rubbing their hands together just itching to create more regulation.

It’s not that I don’t believe in regulation; in many instances regulation along with industry standards have made things better and safer, especially in financial services but it is definitely worth asking the question – have we gone too far? Are government bodies regulating for the sake of regulation? Is Mifid27 a valuable and worthwhile improvement over the existing Mifid? Has anyone ever considered some cost/benefit analysis?

One of the side effects of regulatory compliance is that it is crowding out development of the financial services business, consequently advances in banking/insurance/asset management and potential benefits to consumers are slower to appear and maybe never appear.

Now de-regulation is a different matter, the last piece of financial services deregulation I can think of was the partial repeal of the Glass-Steagall Act, an action intended to democratise lending that led to some very serious consequences less than a decade later.

Lots of questions, almost all of them with unintended consequences…