The 3 R’s- Rules & Regulations & Red Tape

Posted on November 10, 2009 by editor
Posted in Investing & investments, Property Related Posts Tagged FSA, red tape, regulations, rules

A question was asked on a forum yesterday which I thought I would answer more fully here:

Should More Regulation Be Introduced Into The Property Industry?
Perhaps a better question is: What could regulation solve that other forms of oversight (e.g. organisations, websites, etc) could not? Do we need more rules and regs to save us from ourselves? And, whose job is it to make that decision? Surely, ultimately it lies with us.

In my humble opinion, more rules and regs won’t necessarily fix the problems in the property industry, what tends to happen is that people who are intent on ripping others off will find another ways to circumvent the new rules. We are all adults. If we get ripped off we may feel aggrieved, but really when it boils down to it, are we upset about the money we lost or our own stupidity and naivety? We all have the same access to the information which is out there. Fact. If you entrust your hard earned cash to a complete stranger or company who sells you a story of untold wealth and riches without doing proper due diligence, well, to put it bluntly, you are asking to get taken for a ride.

Advice

If people are drawn in by unsavory characters, or glossy brochures, flashy websites and offices, then surely they have to learn to sink or swim by themselves. Of course, ( one would hope) everyone has the dream to better themselves, but the buck has to stop somewhere. Whilst I empathise completely with those who have been diddled out of cash, they really should have been more careful to begin with.

Not seeking proper legal advice or checking for other opinions,company accounts, forums and the myriad of different ways to get information, is a fools game. If you get blinded by a slick sales pitch in a subject you know nothing about, should you be investing anyway? I’m sure everyone can still remember the furore over timeshare properties- most of which are worth practically nothing these days.

Accountable

This may seem a little harsh, but at some point the individual has to be accountable for their own actions. Creating a nanny state is not the answer. We are already the most watched society on the planet. Has that helped our crime figures? er…no I don’t think so. Basically, we make our own decisions, sometimes good and sometimes bad. Lets compare property investment to a young baby; you would set it boundaries, teach it right from wrong and then let it find it’s own way. When it falls over it learns to pick itself up and try again. This is the core of learning.

Remember, that the ones who are investing are doing so in the ‘pursuit of profit’ therefore have to accept the potential risk. This is the nature of investment, whether that be in property or another form. It is all about RISK.

Friend and fellow investor John Corey says:

We had almost 10 years of a rising market so it was easy for wild claims to be made and then delivered on. Social media (forums, etc) is a way to get the word out when there is something that does not smell right. Now that we have a down market and more social media, maybe regulation is not the right solution. Regulation cannot stamp out bad decisions by the naive who want to remain the naive.

I completely agree with this. So, what are your thoughts? Should we be even more regulated than we are already- and if so which parts need it and which parts don’t? Is more regulation just the thin end of a wedge? Where will it stop? Feel free to comment below.

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