18 Regulation of the financial sector It is a constant battle to maintain high levels of integrity and competence in the financial service sector. However, the financial service industry recognised long ago that it is in its own best interest to engage in that battle and establish minimum standards of behaviour. If the users of financial services fear that mal- practice is prevalent they will not allow their funds to flow through the system and the financial sector will shrink. These minimum standards need some sort of enforcement mechanism beyond a gentleman's agreement that all participants will behave ethically. Crooks and incompetents would love to join an industry where the majority of providers act with probity, because they can free-ride on the industry's reputation. Thus we need regulation. This may be provided by the