UK financial markets are one of the most highly regulated sectors in the UK. The need for regulation is built upon the 2 main objectives:
- Protecting consumers
- Allowing financial firms to make a profit
Without regulation consumers would be reluctant to use financial firms for fear of losing their money; without financial firms; consumers, businesses and governments would not have access to capital that can help maintain a healthy economy. Before we can look at the importance of having a well organised and functional financial system, we need to look at why we need financial firms. Financial firms allow us to make use of our Money; either by making it grow through investment returns or providing access to extra money through borrowing. Firstly, let’s look at what is money?