TwIsTeD Reflections

I have to spill my 2 cents worth on the regulations of this country. I can only speak from experience from within the Financial Industry in SIngapore, with the regulatory authority being MAS, but I would not in the least bit surprised if the same is applied to other regulating authorities as well. f the recent regulatory changes in the DNC and the PDPA. Many I know have show their support and agreement to these initiatives without knowing what it will cost them into return. In actual fact, what it is doing is forcing inflation to increase by making the companies pay for the regulations that they are forced to comply.As is often the case in the regulatory landscape, only one party benefits from enforcing such regulations: The Regulating Authority.

Some interesting points to take note: The Do-Not-Call registry prohibits all companies and persons from calling anybody who has registered into the DNC registry. While it seems like a good initiatives to prevent spam and nuisance calling, the initiatives forces financial advisers, marketing agents, companies pay as much as 2 cents a number. This amounts to a hefty cost on the industry that will rely on cold calling for business.

This is further escalated when they enforced the PDPA, which restricted all sales-related calling, texting or emails to the individual. Now I know what all of you (or whoever actually does come to read a now-defunct blog) are thinking: That is not so bad is it? No more irritating insurance calls; no more SMSes from strangers, etc.. But here is the truth: These regulations are making companies pay from their own pockets or directly affecting their business. These results in business costs; costs which no company ever will be willing to absorb. So guess who is going to pay for all these celebrated regulatory frameworks? Why you of course. You the consumer, who uses services from banks, who are policyholders of insurance, who is the purchaser of goods and services.

The question is simple: Would you rather things become more expensive when it is simple enough fro you to reject a strange number or ignore a rogue SMS? And of cos, it is important to state that the nuisance calls and SMSes will not simply stop. As the regulations only have authority from Singapore, calls, texts and emails coming from a foreign company (e.g. a company which outsourced their cold calling to) will still persist.

This is a hidden element of the god-like speed of inflation in our nation. It is no surprise that the regulatory framework has helped the industry by rooting out the bad apples, but often, it becomes overzealous and expensive, resulting in higher costs and greater hardship for everyone involved. Well, everyone except the regulator who has become a profit center by collecting fees from companies who have to follow the regulations (i.e. pay or run the risk or non-compliance).

In fact, in an effort to "improve" the insurance industries, MAS has launched a series of new regulatory initiatives, named.... FAIR. Included in this initiatives are the mandatory introduction of the Direct Sales Channel with a standardized product set by MAS, an introduction of a web aggregator which all Insurers have to pay for the maintenance of, the tightening of the introducer framework, the changing of the compensation structure to all agents... etc.

I would need to remind you that the costs to comply to these rulings are not small, but in the hundreds of thousands of dollars in not just one-time payment in structural changes but of regular costs in maintenance or loss in business. It is a wonder whether the regulatory authorities have considered of the potential costs that the company will be forced to accept. The question comes down to whether or not the industry is better for it. Would more people purchase coverage due to increased faith in the system? Would you if I told you that this would likely make all future products more expensive to cover the costs?