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

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  • Tharp, Derek

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.

Suggested Citation

  • Tharp, Derek, 2020. "Potential Consumer Harm Due to Regulation on Financial Advisory Communication in the FinTech Age," SocArXiv cyqbr, Center for Open Science.
    • Handle: RePEc:osf:socarx:cyqbr
    DOI: 10.31219/osf.io/cyqbr
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    References listed on IDEAS

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    1. Ryan, Andrea & Trumbull, Gunnar & Tufano, Peter, 2011. "A Brief Postwar History of U.S. Consumer Finance," Business History Review, Cambridge University Press, vol. 85(3), pages 461-498, October.
    2. John Y. Campbell, 2016. "Restoring Rational Choice: The Challenge of Consumer Financial Regulation," American Economic Review, American Economic Association, vol. 106(5), pages 1-30, May.
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