If finance is allowed to define its own purpose it is unlikely to put “serving society” at the top of the list. Citizens must get involved if they want finance to serve society.
To help citizens engage in defining the purpose of finance, in making its rules and monitoring its performance, three problems must be tackled:
The financial system and its rules have reached an unhealthy level of complexity. There is no evidence that complex processes, products and organizational structures are needed for finance to carry out its core functions - quite the contrary. We have also seen that regulations which try to match the industry’s complexity instead of reducing it are prone to failure.
The public must be able to scrutinise the financial industry and those who police it but this requires simplicity: displaying information so complex that nobody can understand it benefits no one.
3) Lack of understanding
The crisis left a legacy of popular resentment and mistrust of the financial industry, and even of its regulators. Citizens are unlikely to engage unless they understand the benefits of a reformed financial system and of engaging personally, or through civil society organisations to which they belong, to make things better.