Good Regulation: Payday Loans, Securitisation and Insider Trading

Abstract

For free marketeers, no regulation is good regulation and any regulation is bad regulation. But for those who believe that regulation can be good, it is not easy to characterise good regulation. Thomadakis (2007) argues that “good regulation must start with a clear understanding of the objective – and this necessitates a trilateral dialogue between regulators, the regulated community, and the beneficiaries of regulation”. He wonders what makes good regulation and responds with a very simple answer: “good regulation serves the public interest through supporting ongoing confidence in processes, such as the market process, in which the public participates and in activities, such as auditing, on which the public relies”. He then explains why regulation is necessary to support confidence in markets. Thomadakis suggests some criteria for good regulation: necessity, transparency, proportionality, effectiveness and flexibility. D’Arcy (2004) suggests another list of criteria for good regulation: fair (applied equally), simple, inexpensive, enforceable, targeted and proportional.