Potential Consumer Harm Due to Regulation on Financial Advisory Communication in the FinTech Age

Derek Tharp

No cyqbr, SocArXiv from Center for Open Science

Abstract: This paper examines potential consumer harm that may arise due to regulating modern financial services communication technology with rules written in the early 20th century. It is argued that disparities in record keeping regulation across communication mediums disincentivizes the use of technology capable of generating records for consumer retention, while incentivizing the use of technology which shields financial advisors from accountability. Experimental evidence is provided in support of this argument. Further, it is argued that regulation disparities across communication mediums may result in more wrongful accusations of advisor misconduct, less reporting of genuine misconduct, less self-policing among industry members, and greater unrectifiable consumer harm. Objections to these arguments are considered, along with practical guidance for consumers, regulators, and policy makers.

Date: 2020-01-06
New Economics Papers: this item is included in nep-ict and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:cyqbr

DOI: 10.31219/osf.io/cyqbr

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