Question

In what way might consumer protection regulations negatively affect a financial intermediary’s profits? Can you think of a positive effect of such regulations on profits?

Answer 1

The consumer protection policies negatively have an effect on a financial middleman’s income because the business of the economic intermediaries is steady and affiliated with the goal of safeguarding the pursuits of the employer’s customers who're having final duties. These financial intermediaries like banks and small financial establishments grow their business on the boom of the clients of the enterprise to whom they provide financial assistance for growth reasons.

The consumer safety policies positioned strain on the agencies to attend to their clients. The employer has to make greater costs on taking care of the clients in an effort to prevent the boom /expansion of the organization’s production and sales. The agencies do now not find any extra potential or area for expansion. Thus, the earnings of the economic intermediaries were given affected as new financing is not possible because of a loss of organization boom.

The regulations also provide a superb impact on the financial intermediary’s income with the aid of enjoyable the guidelines and regulations for consumer care. When the business enterprise finds unutilized potential for growth, it will borrow from monetary intermediaries and feature extra income and have higher caretaking of the clients. This will grow the income margins of the monetary intermediaries.