When is consumer protection really over-regulation?

I suspect that that the real problem that consumer protection agencies like ASIC and ACCC wrestle with is how can you force service providers to protect consumers from themselves?

Like cigarettes or speeding drivers, how many health warnings, shock ads or mountains of paper of warnings or disclosure will it take before people realise that a product or act is dangerous to their physical or financial health and comes with risks?

Some schemes or products are just unlawful: schemes to defraud people which are obvious crimes or products which are inherently unsafe.

But in daily life consumers demand choice and are willing to exchange risk for reward.

Can you regulate to protect people from themselves? And when does that regulation inhibit business?

Nicholas Gruen argues that, in the case of finance and mortgage brokers, consumer protection has become over-regulation:

Good regulation would:

1. ensure product information was simple and accessible;

2. subject all brokers to an ombudsman to detect and remove bad practice; and

3. require consumers to be advised that brokers were effectively sales agents who do not cover the whole market. Accordingly consumers would be advised to shop around.

Going beyond these simple measures to put customers in the driver’s seat will make things much worse.

But then we have a Westpoint, and surely someone must be to blame.