Financial Services Regulated by Governments

Whether they’re saving for retirement, buying a home or paying for college, most people need financial services to make it happen. These services put money to productive use by channeling cash from savers to borrowers and back again, intermediating risk along the way. Governments regulate these industries to protect consumers and foster trust between providers.

The broad range of financial services includes deposit-taking (banks), investment banking, brokerage, mutual funds, debt and equity financing, credit-card companies and private banks. Some sectors specialize in a particular type of product like money market funds or mortgages, while others offer more general products such as securities trading, investment advice and asset management.

Some of these services are also known as “payment systems” because they help facilitate the transfer of funds through credit and debit cards, bank drafts (like checks), electronic money transfers and wires. Other payment services include the clearing houses and derivative and commodity exchanges that enable trading in these markets.

Because so many of these services overlap, it’s important for regulators to ensure that firms that provide different types of financial products are properly licensed and supervised. This is why some countries have separate regulatory agencies that oversee different parts of the financial services industry. In the United States, for example, there are state and federal agencies that focus on consumer protection, investor regulation, bank supervision and capital markets oversight. Other countries have a single agency that oversees both insurance and securities.

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