That’s fine in theory – and in general I welcome it – but the fact is that whatever organisation does the regulation the chances are that it the same people who will do the day-to-day regulation.

In my experience (and I have had far too much of it) the people doing the regulation are at best second rate.

Just think how it must be when a succesful hedge fund manager – multi millionaire – comes up with a complex, complicated product and presents it to the regulator who doesn’t actually understand it. By force of arguement or by bullying the hedge fund manager pushes the product through because at the end of the day the regulator doesn’t undertand it and probably says nothing being unwilling to admit their ignorance.

So when the scheme goes wrong who was to blame?

Further, what actually happens is that the regulator ends up regulating completly unimportant areas of the business. You get regulation for regulation’s sake and a complete “tick-box” system.

Would self-regulation work any better? Possibly but in my humble opinion people (investors) should take responsibility for their own decisions and not expect regulators to do it for them. If it sounds too good to be true then it possibly is too good to be true.

More pertinately – if you don’t understand what it is you are investing in then don’t invest. Apart from anything else if it is complicated then you can rest assured the regulator doesn’t understand it either!