The Consumer Federation of America said financial services should be regulated by what they do, not who they are.
Speaking at an SEC and Commodity Futures Trading Commission Sept. 2 public meeting on the harmonization of market regulation, CFA Director of Research Mark Cooper said he supports identifying steps to close gaps and conflicts between the two agencies including adopting "the approaches of the agency whose statutes and practices are better suited to get the job done." However, financial services reform within all agencies should stem from accountability and effective oversight.
"Entities providing financial services should be regulated by what they do, not who they are. If they are providing bank-like services, they should be regulated like a bank; if they provide insurance services, they should be regulated like insurance companies," Cooper said.
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Only after policy makers identify the principles that need to be applied and the rules that should be implemented can they even ask where harmonization is necessary, Cooper explained. The inquiry should not start by asking financial market participants how they want to be regulated but by asking how market participants should be regulated, he added.
"The fact that a single entity might be selling different financial products in different markets that are regulated differently by different agencies is perfectly reasonable. It reflects a choice made by the entity regarding how to structure its business, not a flaw in regulation."
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