Questions have again been raised about whether those working within the financial services industry should be able to sit on the board of its regulator.

Visiting economist John Kay addressed the question in his recent seminar, which was called: Why has financial regulation failed?

Asked whether there could be a potential problem in having people move back and forth between roles in the regulated industries and the boards that regulate them, he said it was hard to see it as anything else.

The Productivity Commission issued a report in 2014, in which it said there was a risk of conflict because all the members of the FMA board were in active in the business world as well as holding governance roles.

Adviser Brent Sheather said it was something that needed to be addressed if consumer confidence was to improve.

“I have been in this industry since 1984 and have always been concerned that while the participation of retail investors is encouraged it is not always clear that too many people are looking out for their interests. “

The Financial Markets Authority board has former Deloitte chief executive Murray Jack as chair, alongside an economist, chartered accountant, two lawyers, a journalist, fund manager, adviser and professional director.

Britain’s Financial Conduct Authority board is manned by people from backgrounds including KPMG, Credit Suisse and Deloitte as well as a former MP, co-chair of a charity, academic, regulatory specialist and a pension fund manager.

In the US, most of the board members of the Securities and Exchange Commission are people from regulatory, legal or academic backgrounds.

FMA spokesman Andrew Park said there were systems in place to manage the issue.

“The FMA has robust policies to manage any potential conflicts of interests around its board and governance arrangements once members have been appointed. The board appointments are approved by the minister and subject to a rigorous selection process. Selection is based on a range of criteria including the overall consideration on ensuring there is breadth of expertise and experience from various sectors and including the financial services industry itself.”

Adviser Murray Weatherston said he could understand the complaint but it was hard to see an alternative.

“The board has got to come from somewhere. Where are the board members going to come from otherwise, are we suggesting they appoint people who know nothing about it?”

FMA chief executive Rob Everett told the Productivity Commission the benefits of the current governance structure in terms of informed regulation and to the executive in terms of access to market and industry experience outweighed any logistical challenges relating to avoiding conflicts.