The rationale and conduct of regulation

Investments can be mis-sold.There can be malpractice and misrepresentation.These could arise from inadequate training of advisers or from conflicts of interest. For example if advisers are paid by commission, they may be inclined to sell the products that pay the highest commission rather than the products most suitable for the needs of their clients.A major source of possible malpractice is asymmetric information; the supplier of an investment product knows much more about it than the consumer does. Full and accurate information could be withheld from the consumer.