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Better Information Sharing Among Financial Services Regulators Could Improve Protections for Consumers

GAO-04-882R Published: Jun 29, 2004. Publicly Released: Jul 29, 2004.
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GAO has long held the position that financial regulators can benefit from improved information sharing. As regulators are faced with the challenges of overseeing a myriad of financial products, along with the individuals and organizations that develop and sell them, information sharing among regulators serves as a key defense against fraud and market abuses. However, our system of financial regulation is fragmented and, in many cases, isolated among numerous federal and state financial regulators overseeing the securities, insurance, and banking industries. While there has been a greater effort to improve communication in recent years, the routine sharing of information between the regulators of the three major financial industries--securities, insurance, and banking--continues to be a source of concern. At Congress' request, we have issued reports and testimonies in recent years discussing the benefits of improved sharing of criminal and regulatory information and the consequences of failing to adequately share such information. This report focuses on three areas where greater attention is needed to improve information-sharing capabilities among financial services regulators. First, we highlight the need for insurance regulators to have more consistent access to the Federal Bureau of Investigation (FBI) nationwide criminal history data. Second, we discuss the importance of sharing regulatory enforcement data as a tool to prevent the migration of undesirable people, or rogues, from one industry to another. Third, we present the results of new work assessing the regulatory oversight structures for certain hybrid financial products and the extent to which regulators share consumer complaint data that may be relevant to multiple regulators in a routine, systematic fashion. Finally, we highlight challenges to improving information sharing among financial regulators.

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Information disclosureInformation resources managementInternal controlsStrategic planningInteragency relationsComputer matchingstate relationsRegulatory agenciesFraudCrime preventionFinancial institutions