Rethinking investor protection – the case for more regulatory intervention

Martin Wheatley last night made a strong case for greater regulatory intervention in retail and wholesale financial products in his International Distinguished Lecture to the Australian Centre for Financial Studies.

Martin Wheatley, CEO Securities and Futures Commission, Hong Kong and CEO designate of the UK Financial Conduct Authority (FCA) last night delivered a thoughtful presentation entitled “Rethinking investor protection”.

He stated that “the global financial crisis had precipitated regulatory actions in immediate response to the massive problems that threatened to bring down the global financial systems.” Then Wheatley noted that governments and regulators are now taking “a more considered approach to reforms”.

In the words of Wheatley, soon to be one of the UK’s most powerful regulators, “pivotal to the reform process” will be “enhancing investor protection regimes”.

Wheatley acknowledged that “black letter” rules are not the perfect solution, but he noted that “you can’t legislate ethical behaviour”.

And “to rebuild investor confidence and to tackle the challenges posed by product markets featuring a much broader spectrum of complexity” will require “greater use of judgement, a forward-looking perspective, and pre-emptive actions to stem any potential build-up of risk before significant damage is done”.
Mr Wheatley concluded that “financial markets are about managing and pricing risk, not its elimination”.