Financial Services and Consumers: issues and challenges in a context of change

Financial services affect all of our lives. The welfare of consumers and nations is strongly affected by financial decisions large and small; whether that is choosing a mortgage, saving for retirement, borrowing to fund current consumption or protecting oneself from financial risks. Financial services are largely intangible, high in experience and high in credence qualities. The implications for consumers are that financial services, particularly complex financial services, are difficult to grasp mentally, there are limited opportunities for learning due to infrequent interaction with providers, information asymmetries between consumers and financial services providers require individuals to depend on experts, thereby creating the need for trust. Risk and uncertainty are inherent to many financial decisions. Not surprisingly, under these conditions consumers are often poorly informed and susceptible to making poor decisions that not only have significant personal consequences but also societal consequences.

In the wake of the financial crisis consumer confidence and trust in financial services has been affected. Governments globally have responded to rebuild the financial services industry. The UK FSA is focused on building a "reformed, fair and competitive" industry. The seminar series offers a timely opportunity to discuss the issues and challenges facing consumers in the context of recent and on-going regulatory and policy developments in the financial services industry, including among other things the establishment of a new Financial Conduct Authority, the Retail Distribution Review, and pensions auto-enrolment. These developments are aimed at benefitting consumers from fairer treatment, tougher conduct regulation, better sales practices, access to more financial information and advice, and greater engagement with retirement saving. However, the full effect of these developments is still to be felt on consumers.

Set against this context the seminar series will provide an opportunity to discuss from various perspectives the issues and challenges facing consumers in making financial decisions. Understanding the issues and challenges facing consumers in the context of financial services is both a theoretical and practical task. Drawing on the latest research in financial services decision-making the seminars will provide an opportunity to discuss and offer insights into the extent to which recent and planned regulatory and policy developments are expected to achieve the desired aims of enabling consumers to take a responsible approach to personal finance, the extent to which they are empowering consumers and building capacity, and the extent to which they are able to support and protect consumers in dealing with decisions that are inherently risky and uncertain.

The seminar series is designed to explore the interconnections between three main themes: (1) consumer financial literacy, capacity and experience in making financial decisions, (2) the financial advice and guidance landscape and regulatory structure supporting and protecting consumer financial decisions, and (3) the role of new media and technology in supporting and enabling decision-making, including the potential to empower, include or exclude certain groups. The seminar series will bring together people working in each of these areas to explore the issues and challenges facing financial services consumers and potential solutions to supporting and protecting consumers.

The central aim of the seminar series is to look holistically at the issues facing financial services consumers in the context of change with a view to:

-creating new knowledge and building research capacity, particularly for early career researchers;
-exchanging knowledge and fostering collaboration by promoting dialogue and interchange between academics, policy makers and practitioners;
-disseminating the outputs from the seminar series to the widest audience possible.

Regulators and policymakers will gain insights into the ways in which financial services consumers have responded or are likely to respond to recent and planned developments in regulation and policy aimed at consumers. Current policies will be evaluated using rigorous evidence based research, and on-going developments will be informed by an enhanced understanding of what is effective and where challenges exist. The seminar series will bring together research on the current and likely future impact of consumer financial literacy and education programmes, the information and advice landscape post Retail Distribution Review, and levels of trust in the industry and attendant behavioural impacts.
Organisations and associations that champion the financial services consumer voice, such as the Financial Services Consumer Panel will benefit from hearing about the latest research on the nature of financial services consumer attitudes and behaviour. This will provide insights into the factors affecting financial services behaviour, including psychological and social factors, the interactions between trust, confidence, knowledge and behaviour, also in how attitudes and behaviours are changing in the current climate and how best to respond to support consumers in making financial services decisions. Insights will assist in understanding how best to support and protect consumers, especially vulnerable consumers, and can add weight to the work in support of consumer protection.
Practitioners will benefit in particular from insights that inform them of how consumers form perceptions of trust and fairness in financial institutions and how such perceptions are likely to influence consumer behaviour. They will also gain an insight into how to measure such perceptions accurately and how to compare their performance to relevant industry benchmarks.
Journalists can gain a greater understanding of the issues and challenges facing consumers of financial services and the recent and likely future impact of regulatory and policy developments: for example, on the impact of the advice landscape on consumers' capacity to make informed responsible financial decisions and the impact of the Financial Conduct Authority on its ability to protect consumers from further mis-selling and malpractice.
From an early stage user groups have been represented in the design of the seminar series through discussions with ifs School of Finance and via Professor Devlin's Directorship of the Financial Services Research Forum. We have also researched the key priorities of the FSA and the Financial Services Consumer Panel to ensure that the seminar themes accord with their key priorities and thus will be of interest and relevance to the wider financial services industry.
Drawing on our personal contacts and experience and the considerable networks available to us via ifs School of Finance and the Financial Services Research Forum we will ensure that non-academic beneficiaries are well represented at the seminars. Non-academic beneficiaries will be invited as audience or panel participants. Panel discussions at the end of each seminar will be used to contextualise the research findings for user communities, to increase usability and to ensure meaningful impact. We will identify key issues and insights arising and use these as the basis for dissemination in the form of bulletins via the website.
We can also use the database and contacts at ifs School of Finance and FSRF. The FSRF has a network of over 200 affiliates from the commercial, policymaking and third sectors and a website that we can use for dissemination. The Forum also runs a LinkedIn Group, a blog with regular posts and a twitter feed that we can use to advertise the seminar series. The production of an edited book is also likely to be of interest to non-academic users. Practitioner journals, such as Financial World, Chartered Banker, Securities and Investment Review can be used to reach non-academic users.