When Duncan Fairweather finishes his last day as chief executive of the Australian Financial Markets Association this week the memory he will take away as the organisation's most significant achievement will be the way it handled the financial crisis in 2008.When the Government announced a ban on short-selling in September 2008, industry participants spent a frantic weekend making sure the market could manage the change when it opened the following Monday morning, which it did.And when the Government decided to introduce a deposit guarantee, its initial idea was to limit the guarantee to local banks. The industry had to act quickly to persuade the Treasurer that such a limitation would be too much of a market distortion.While the Government and its regulators are fond of reminding the public how well they responded to the financial crisis, Fairweather feels the industry does not get much credit for the way it acted at that time.Fairweather, a former journalist, took over as the head of the International Banks & Securities Association of Australia in 2001. When that body merged with AFMA, in 2005, Fairweather became CEO of the merged entity.At 66, he feels ready to retire from full-time work. He has not announced any plans for his post-AFMA years.The financial crisis gave way to what Fairweather calls an unprecedented period of regulatory review in the Australian financial services industry. AFMA's role has been to make sure the industry's voice has been heard during that process.Overall, he feels that when our regulators were put to the test over the past five years they did extremely well. However, he sees a few worrying trends in the aftermath.One is the tendency of the Government to see regulatory cost recovery as a source of income. Fairweather said the major banks had each spent about $100 million to build systems to handle their responsibilities under the anti-money laundering and counter-terrorism financing regime.Fairweather said: "The banks are meeting their obligations, through AML/CTF, and assisting government... [in dealing] with tax avoidance, national security and other criminal issues. We do that at considerable ongoing cost and then have to pay an AUSTRAC levy."The issue of regulatory cost recovery is increasingly sensitive. Business is down, jobs are going and government costs are going up."Another issue that concerns Fairweather is the grey area where regulators appear to be moving out of a purely administrative role and creating policy instead. He has a question mark over some of the Australian Securities and Investments Commission's recent regulatory guidance on market supervision.Fairweather said: "We supported the transfer of market supervision from the Australia Securities Exchange to ASIC when Chi-X entered the market.The transition has been pretty smooth and ASIC has done a good job taking on that role. But there are a couple of things.ASIC appears to be doing its job in a rolled-gold way and spending more money that it needs to. The ASX spent $5 million to $10 million a year on market supervision. ASIC is into multiples of that.But the big issue is