In addition, deregulation of financial markets and the reduction in costs brought about by developments in information technology have resulted in a proliferation of new products; the pace of financial innovation is so fast that investors are faced with products with too short a history to make reliable estimates of the probability of returns. They must be made aware of this.
Customer protection promotes confidence in the enforceability of contracts, an essential ingredient for financial intermediation. Properly enforced consumer protection prevents intermediaries from adopting reprehensible practices and enhances competition based on prices, quality of services and product innovation. Appropriate regulation on the conduct of business makes it easier for customers to react to malpractices earlier and regardless of sanctions imposed by supervisory authorities.