126.96.36.199 Prevention of cheating
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Product and service descriptions need to be trustworthy. Although freedom of speech is regarded as morally desirable (188.8.131.52), it should not extend to permission to mislead customers on the value of products and services; most countries have regulations to prevent that. On the other hand, if too much information has to be provided it can be confusing and expensive.
If people cannot have confidence in what they are buying, they will not buy as much – whether the products and services themselves are good or bad. They must have the right to return goods that aren’t satisfactory, and to recover the cost of purchase. They must also have the right to recover the cost of unsatisfactory services.
Banking regulations help to improve investor trust and to avoid bank failures. But the credit crisis of 2008 showed that the supervision system had failed to keep up with new business practices. As The Economist pointed out, in an article entitled After the fall, “Regulators need to be able to put more trust in banks’ risk models and rating agencies and supplement them with simple rules about the level of borrowing”. The challenges of bank regulation (184.108.40.206) and restructuring financial markets (3.5.5) are examined later in this chapter.