Mentor RIA Consulting
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|Posted on October 30, 2019 at 11:42 AM|
When we speak of the costs of government, the first topic usually is taxes, fees, and charges that appear in a myriad of forms and circumstances. We often don’t get past this aspect of governmental burdens and that means some other direct costs are not fully exposed or understood. One that is often mentioned but rarely discussed in detail is the cost to us all of regulations.
Examples of how regulations can cost a great deal can easily be found – here’s one I ran into recently. As almost everyone knows, the pervasive use of the internet, the cloud and their extended family has resulted (naturally) in some folks using the technology in nefarious ways. This in turn has raised substantial interest in what is often called cybersecurity and that of course means regulations to ensure that folks are not harmed. In the financial industry, for example, firms are required to implement measures and processes to provide cybersecurity to their customers. That makes sense.
However, it is easy for regulators to get carried away. The example we will note here is the recent release by a national association which identifies no fewer than 89 assessment areas for member firms to examine for purposes of addressing cybersecurity needs. I haven’t had either the time or the heart to plow my way through all of them yet, but I can assure you that simply reading them all, let alone comparing them to the programs a firm may already have in place, takes time which costs money which in turn will be a charge passed on customers who may or may not benefit from this level of detail. It almost seems like the regulators had a contest to see who could come up with the most items with the most minor distinctions or lack of real life application.
A straightforward, plain language regulation covering the topic would make more sense and be understandable and usable by firms and their customers. Given that all the regulation in the world will not guarantee protection for customers makes it even more problematic that firms will be burdened by the excessive detail and overlap. Of course, this does ensure paying jobs for additional regulators and the lawyers.