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More paternalism in the regulation of consumer financial investments? Private sector duties and public goods analysis

Published online by Cambridge University Press:  27 May 2021

Iris H-Y Chiu Open the ORCID record for Iris H-Y Chiu [Opens in a new window]
Iris H-Y Chiu*
Affiliation:
UCL, London, UK
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*Author e-mail: [email protected]
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Abstract

Paternalistic forms of regulation for the retail investment market have been gradual and restrained, even though significant gaps exist between investors’ needs and market-based provision. As ordinary citizens reckon with a variety of savings needs and become financial citizens responsible for their own financial welfare provision, financial health is not merely an issue of individual fortunes but a social need. Adverse financial welfare consequences can at scale become a social issue, as is reflected in the social demands and critique entailing from the collapse of London and Capital Finance in the UK. The need for more regulatory paternalism goes beyond preventing mis-selling, and the outworking of welfare beyond point-of-sale remains relatively unconsidered. Post-sale welfare is, however, increasingly recognised for consumer credit and is slower to catch on in relation to savings needs and investments. This paper advocates that the regulator should not remain ambivalent about the need for more paternalistic interventions. Paternalistic protection is not only about shifting more burdens to the industry but also about the provision of public goods where there are standardised baseline needs for retail investors. This paper unpacks the roles of both the public and private sectors in addressing retail investors’ financial welfare needs.

Keywords

consumer investmentsfinancial advicefinancial guidanceproduct governancefinancial literacymis-selling
Type
Research Article
Information
Legal Studies , Volume 41 , Issue 4 , December 2021 , pp. 657 - 675
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press on behalf of The Society of Legal Scholars

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Footnotes

†

Professor of Corporate Law and Financial Regulation, University College London. I thank Alan Brener for his help in putting together a response to the FCA Consultation on Consumer Investments, on which this paper is based. I also thank two anonymous reviewers for helpful suggestions and comments to amend an earlier version of this paper. All errors and omissions are mine. This paper was written before the FCA consulted on a new Consumer Duty on 14 May 2021. The new duty recognises the importance of consumer outcomes but continues to focus on point-of-sale protection. This paper offers proposals beyond point-of-sale but a detailed comparison is beyond the scope of this piece.

References

1 ‘London Capital & Finance: £236m firm collapses’ (BBC News, 9 March 2019), https://www.bbc.com/news/uk-england-47454328. The FCA's role was critically investigated in The Rt Hon Dame Elizabeth Gloster DBE, Report of the Independent Investigation into the Financial Conduct Authority's Regulation of London Capital & Finance plc (December 2020), https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/945247/Gloster_Report_FINAL.pdf.

2 Eg FCA's investigative findings on unsuitable pension transfer advice: ‘FCA warned of major scandal as almost 2,000 face suitability probe’ (27 January 2020), https://citywire.co.uk/wealth-manager/news/fca-warned-of-major-scandal-as-almost-2000-face-suitability-probe/a1317159.

3 Consumers may make poor investment decisions unadvised: Estelami, H ‘Cognitive drivers of suboptimal financial decisions: implications for financial literacy campaigns’ (2009) 13 Journal of Financial Services Marketing 473CrossRefGoogle Scholar.

4 Eg Kingsford-Smith, D ‘Regulating investment risk: individuals and the global financial crisis’ (2009) 32 UNSW Law Journal 514Google Scholar.

5 The regulation of investment markets was largely self-regulatory, led by trade associations until the institution of the Securities Investments Board in 1986: J Black Rules and Regulators (Oxford: Clarendon 1993) chs 2 amd 3.

6 Markets in Financial Instruments Directive 2004/39/EC (MiFID 2004).

7 MiFID 2004, above n 6, and Markets in Financial Instruments Regulation 600/2014.

8 Moloney, N ‘The investor model underlying the EU's investor protection regime: consumers or investors?’ (2012) 13 European Business Organisations Law Review 169Google Scholar; Ramsay, I and Williams, T ‘Peering forward, 10 years after: international policy and consumer credit regulation’ (2020) 43 Journal of Consumer Policy 209CrossRefGoogle Scholar.

9 Although this can be argued to be focused on financial stability concerns, rather than consumer welfare as such.

10 FCA Policy Statement, https://www.fca.org.uk/publication/policy/ps19-24.pdf, FCA Handbook COBS 5.6.5E.

11 FCA Call for Input: Consumer Investments (15 September 2020), https://www.fca.org.uk/publications/calls-input/consumer-investments; see update in FCA A New Consumer Duty (14 May 2021), https://www.fca.org.uk/publications/consultation-papers/cp21-13-new-consumer-duty.

12 G Dworkin ‘Paternalism’ (1972) Part III, http://web.uncg.edu/dcl/courses/vicecrime/m2/Dworkin_Paternalism.html.

13 Section 1.

14 In this regard we move away from purely economic-based rationales for financial regulation: FCA Economics for Effective Regulation (2016), https://www.fca.org.uk/publications/occasional-papers/occasional-paper-no-13-economics-effective-regulation. Pro-social rationales for financial regulation: McVea, H ‘Financial services regulation under the Financial Services Authority: a reassertion of the market failure thesis?’ (2005) 64 Journal of Consumer Law Journal 413Google Scholar; T Lothian Law and the Wealth of Nations (NY: Columbia University Press, 2016).

15 D Bugeja Reforming Corporate Retail Investor Protection: Regulating to Avert Mis-Selling (Oxford: Hart Publishing, 2019) ch 1, pp 3–12.

16 A-F Lefevre and M Chapman ‘Behavioural economics and financial consumer protection’ (OECD Working Paper2017), http://dx.doi.org/10.1787/0c8685b2-en.

17 N Moloney How to Protect Investors (Cambridge: Cambridge University Press, 2010) ch 1.

18 Eg the prospectus summary, EU Prospectus Regulation 2017/1129; the Key Investor Document, UCITs Directive 2009/65/EU and Commission Directive 2010/43/EU; Insurance Distribution Directive 2016/97/EU and Pan-European Personal Pension Product Regulation 2019/1238; the Key Investor Information Document, PRIIPs Regulation 1286/2014; and consumer information sheets for consumer and mortgage credit, Consumer Credit Directive 2008/48/EC and Mortgage Credit Directive 2014/17/EU, see V Colaert ‘Product information for banking, investment and insurance products’ in V Colaert et al (eds) European Financial Regulation: Levelling the Cross-sectoral Playing Field (Oxford: Hart Publishing, 2019) ch 13. The efficacy of short-form documents in improving consumer understanding is found to be mixed: Godwin, A and Ramsay, I ‘Short-form disclosure documents – an empirical survey of six jurisdictions’ (2016) 11 Capital Markets Law Journal 296CrossRefGoogle Scholar; Oehler, A et al. ‘Do key investor information documents enhance retail investors’ understanding of financial products? Empirical evidence’ (2014) 22 Journal of Financial Regulation and Compliance 115CrossRefGoogle Scholar.

19 Markets in Financial Instruments Commission Regulation (MiFID Commission Regulation) 2017/565, Arts 44–50 providing lists of standardised information to clients. The list approach may promote box-ticking, instead of engaging investors’ attention: Goulard, B et al. ‘Can disclosure in Canada's federal financial consumer protection framework protect the digital consumer?’ (2015) 35 Banking & Finance Law Review 333Google Scholar; Franco, JA ‘A consumer protection approach to mutual fund disclosure and the limits of simplification’ (2009) 15 Stanford Journal of Law, Business & Finance 1Google Scholar.

20 Board of Governors of the Federal Reserve System ‘Designing disclosures to inform consumer financial decision-making: lessons learned from consumer testing’ (Federal Reserve Bulletin, August 2011, Issue 3); TB Gillis ‘Putting disclosure to the test: toward better evidence-based policy’ (2015) 28 Loyola Consumer Law Review 31; Y Gómez et al ‘Spanish regulation for labeling of financial products: a behavioral-experimental analysis’ (2016) 33 Economia Politica 355 on labelling reforms triggering unintended consequences of obfuscation.

21 G Howells ‘The potential and limits of consumer empowerment by information’ (2005) 32 Journal of Law and Society 349.

22 FCA Handbook COBS 4.1, on how manipulative advertising can push the boundaries of ‘fair, clear and not misleading’; G Brookes and K Harvey ‘Just plain wronga? A multimodal critical analysis of online payday loan discourse’ (2017) 14 Critical Discourse Studies 167.

23 JY Campbell ‘Restoring rational choice: the challenge of consumer financial regulation’ (2016) 106 American Economic Review 1 calling for more paternalistic regulatory measures beyond disclosure.

24 MiFID 2004, above n 6, Art 25; and MiFID Commission Regulation 2017/565, Arts 52, 54–55; FCA Handbook COBS 9A.2.

25 MiFID 2004, above n 6, Art 25; MiFID Commission Regulation 2017/565, Arts 52, 55–56; FCA Handbook COBS 10.2 for non-MiFID business and 10A.2 for MiFID business.

26 MiFID Commission Regulation 2017/565, Art 45; FCA Handbook COBS 3.1.4.

27 Advice can be ‘restricted’, ie the adviser is tied to a limited range of products. The procedural application of suitability can be a formalistic and substantively disengaged exercise: A Oehler and D Kohlert ‘Financial advice giving and taking – where are the market's self-healing powers and a functioning legal framework when we need them?’ (2009) 32 Journal of Consumer Policy 91.

28 MiFID Commission Regulation 2017/565, Art 53(1).

29 Financial Services Authority Distribution of Retail Investments: Delivering the RDR – professionalism (2011), https://www.fca.org.uk/publication/policy/fsa-ps11-01.pdf.

30 A problem widely criticised, see pre-RDR literature: G Spindler ‘Behavioural finance and investor protection regulations’ (2011) 34 Journal of Consumer Policy 315; R Inderst and M Ottaviani ‘Regulating financial advice’ (2012) 13 EBOR 337; other jurisdictions: R Batten and G Pearson ‘Regulating financial advice’ (2013) 87 St John's Law Review 511.

31 FCA Handbook COBS 6.1A.

32 Ibid, at COBS 6.1A.1A–2A.

33 Discussed above.

34 J Kozup and JM Hogarth ‘Financial literacy, public policy and consumers’ self-protection’ (2008) 42 Journal of Consumer Affairs 127.

35 See above n 19.

36 MiFID Commission Regulation 2017/565, Art 54.

37 MiFID 2004, above n 6, Art 25(6).

38 D Llewellyn ‘Consumer protection in retail investment services: protection against what?’ (1994) 3 Journal of Financial Regulation and Compliance 43.

39 J Gray and J Hamilton Implementing Financial Regulation: Theory and Practice (Chichester: John Wiley & Sons, 2006) ch 6.

40 S Nield ‘Mortgage market review: “hard-wired common sense?”’ (2015) 38 Journal of Consumer Policy 139 arguing that post-sale customer care for mortgage credit ought to be based on citizenly values in relation to retail financialisation.

41 D Kingsford Smith and O Dixon ‘What next for the financial consumer: more disclosure? Caveat vendor? Fintech online?’ in G Howells et al (eds) Handbook of Research in International Consumer Law (Cheltenham: Edward Elgar, 2018) ch 15.

42 Pensions Act 2008, s 3.

43 National Employment Savings Trust (NEST) accountable to the Department for Work and Pensions and to Parliament.

44 Individual Savings Accounts Schemes, https://www.gov.uk/individual-savings-accounts.

45 AK Aldohni ‘The UK new regulatory framework of high-cost short-term credit: is there a shift towards a more “law and society” based approach?’ (2017) 40 Journal of Consumer Policy 321; A Fejős ‘Achieving safety and affordability in the UK payday loans market’ (2015) 38 Journal of Consumer Policy 181 on the price cap for payday lending; S Agarwal et al ‘Regulating consumer financial products: evidence from credit cards’ (2015) Quarterly Journal of Economics 111; N Sarin ‘Making consumer finance work’ (2019) 119 Columbia Law Review 1519 on credit card charge limitations under the US CARD Act, regarded as effective for protection from unnecessary welfare losses.

46 Ibid.

47 Such as the right of borrowers to challenge lenders in an unfair credit relationship: Consumer Credit Act, s 140A. Also, s 75 of the Act allows borrowers to make card companies jointly liable with retailers: see Sarah Brown ‘European regulation of consumer credit: enhancing consumer confidence and protection from a UK perspective?’; K Fairweather ‘The development of responsible lending in the UK consumer credit regime’ in J Devenney and M Kenny (eds) Consumer Credit, Debt and Investment in Europe (Cambridge: Cambridge University Press, 2012) chs 3, 4.

48 The Towers Watson review for the FCA predicted an advice gap for the less affluent: ‘Advice gap analysis: report to FCA’ (2014), https://www.fca.org.uk/publication/research/advice-gap-analysis-report.pdf; confirmed in HM Treasury and FCA Financial Advice Market Review (2016).

49 Empirical findings show that financial advice helps to motivate saving: F Liu et al ‘Professional financial advice, self-control and saving behavior’ (2019) 43 International Journal of Consumer Studies 23; also portfolio diversification, which can lead to better investment outcomes than unadvised: H-M von Gaudecker ‘How does household portfolio diversification vary with financial literacy and financial advice?’ (2015) 70 Journal of Finance 489; CD Zick and RN Mayer ‘Evaluating the impact of financial planners’ in OS Mitchell and K Smetters (eds) The Market for Retirement Financial Advice (Oxford: Oxford University Press, 2013) ch 8.

Such findings are tempered if advisers are affected by conflicts of interest: R Inderst and M Ottaviani ‘Financial advice’ (2012) 50 Journal of Economic Literature 494; S Foerster et al ‘Retail financial advice: does one size fit all?’ (NBER Working Paper 2014), https://www.nber.org/papers/w20712.

50 Gloster Report, above n 1.

51 Seymour v Ockwell [2005] EWHC 1137 (Comm) was a case where a handsome undisclosed commission could have affected the investment advice given. The adviser was held in breach of fiduciary duty for failure to disclose the commission.

52 Moloney, above n 17, ch 4.

53 MiFID 2004, above n 6, Art 24(7).

54 Towers Watson, above n 48; HM Treasury and FCA Financial Advice Market Review (2016).

55 D Gupta ‘Improving the suitability of financial advice’ (Speech, 12 September 2019), https://www.fca.org.uk/news/speeches/improving-suitability-financial-advice.

56 Moloney, above n 17, ch 4.

57 Ibid.

58 Clarification made after the Financial Advice Market Review: FCA Perimeter Guidance on Personal Recommendations on Retail Investments (February 2018), https://www.fca.org.uk/publication/policy/ps18-03.pdf.

59 FCA Call for Input, above n 11, para 3.7.

60 PJ Ring ‘Analysing the reform of the retail financial advice sector in the United Kingdom from an agencement and performativity perspective’ (2015) 19 Competition and Change 390.

61 FCA Evaluation of the impact of the Retail Distribution Review and the Financial Advice Market Review (December 2020).

62 Europe Economics Retail Distribution Review: Post-Implementation Review, Report for the FCA (16 December 2014).

63 Early findings on increased levels of customers not being in the market for advice: NMG Consulting ‘Impact of the retail distribution review on consumer interaction with the retail investments market’ (2014).

64 Self-help in navigating complex financial products has proved fatal for unsophisticated small businesses in a series of litigation involving interest-rate hedging products, eg Green and Another v Royal Bank of Scotland plc (Financial Conduct Authority intervening) [2013] EWCA Civ 1197, Grant Estates Ltd (In Liquidation) [2012] CSOH 133; Bugeja, above n 15; V Bavoso ‘Financial innovation, derivatives and the UK and US interest rate swap scandals: drawing new boundaries for the regulation of financial innovation’ (2016) 7 Global Policy 227.

65 https://www.moneyadviceservice.org.uk/en.

66 FSA Thoresen Review of Generic Financial Advice (2008).

67 A Zokaityte ‘The UK's money advice service: edu-regulating consumer decision-making’ (2018) 47 Economic Notes 387.

68 Test-based financial literacy levels can be unstandardised and non-comparable: OA Stolper and A Walter ‘Financial literacy, financial advice and financial behaviour’ (2017) 87 Journal of Business Economics 581. A frequent indicator of financial literacy levels is based on the Big Three questions, https://gflec.org/wp-content/uploads/2015/04/3-Questions-Article2.pdf; L Klapper and A Lusardi ‘Financial literacy and financial resilience: evidence from around the world’ (2020) 49 Financial Management 589.

69 There is an issue of applicational relevance as well as investors losing financial literacy gained over time: D Fernandes et al ‘Financial literacy, financial education, and downstream financial behaviors’ (2014) 60 Management Science 1861; see Estelami, above n 3 on literacy training programmes being less useful as investors rely on behavioural heuristics.

70 OJ Williams and SE Satchell ‘Social welfare issues of financial literacy and their implications for regulation’ (2011) 40 Journal of Regulatory Economics 1; V Vyvyan et al ‘Factors that influence financial capability and effectiveness: exploring financial counsellors’ perspectives’ (2014) 8 Australasian Accounting, Business and Finance Journal 4.

71 Bugeja, above n 15; Bavoso, above n 64.

72 FCA Call for Input, above n 11. The FCA's consultation on a new consumer duty, above n n 11, does not explicitly address pre-sale guidance. Instead it chooses to frame a higher standard of care as a principle for conduct, and motivates firms in a more open-ended manner to help customers make optimal choices. This meta-regulatory approach may lead to fragmentation instead of consistent consumer expectations, but may also – with supervisory monitoring – be refined.

73 See discussion below.

74 MiFID 2004, above n 6, Art 25(6).

75 L Fox O'Mahony and L Overton ‘Financial advice, differentiated consumers, and the regulation of equity-release transactions’ (2014) 41 Journal of Law and Society 446, finding that more knowledgeable customers benefit from advice, and there may be a persistent ‘assistance’ gap for less capacitated customers despite mandatory advice.

76 T Nikiforova ‘The place of robo-advisors in the UK independent financial advice market: substitute or complement?’ (2017) at http://ssrn.com/abstract=3084609.

77 Growing popularity of digital investment platforms and robo-advice, Public Attitudes to Financial Advice Survey (2016), https://bandce.co.uk/wp-content/uploads/2016/02/201602-Public-attitudes-to-advice.pdf; F Abraham et al ‘Robo-advisors: investing through machines’ (World Bank Research and Policy Brief, 2019).

78 The largest robo-adviser in the UK, Nutmeg, has over £800m in assets under management but is a restricted adviser recommending its own products.

79 Inderst and Ottaviani, above n 49.

80 Section 2.

81 JY Campbell et al ‘Consumer financial protection’ (2011) 25 Journal of Economic Perspectives 91; FCA Handbook MCOB 13.3.2A.

82 SA Holden ‘When, why, and how do mutual fund investors use financial advisers?’ in Mitchell and Smetters, above n 49, ch 12; T Williams ‘Who wants to watch – a comment on the new international paradigm of financial consumer market regulation’ (2013) 36 Seattle U L Rev 1217.

83 Financial Services and Markets Act 2000, s 404.

84 Ibid, s 235 ff; V Waye and V Morabito ‘Collective forms of consumer redress: financial ombudsman service case study’ (2012) 12 JCLS 1.

85 FCA Handbook DISP 1, DISP 1.4. Special rules for problem areas of product mis-selling such as endowment mortgages and personal protection insurance have been instituted, DISP Appendix 1 and 3 respectively.

86 Section 3.

87 See https://www.financial-ombudsman.org.uk/consumers/expect/compensation.

88 Financial Services and Markets Act 2000, s 137D; MTR Bailey Trading Ltd and Another v Barclays Bank plc [2015] EWCA Civ 667.

89 E Voyiakis ‘Unconscionability and the value of choice’ in M Kenney et al (eds) Unconscionability in European Private Financial Transactions (Cambridge: Cambridge University Press, 2010) ch 5.

90 Such as fund management charges, trading charges etc.

91 N Moloney ‘Regulating the retail markets: law, policy, and the financial crisis’ (2010) 63 Current Legal Problems 375.

92 Gloster Report, above n 1.

93 FCA Finalised Guidance for Firms on the Fair Treatment of Vulnerable Customers (February 2021), https://www.fca.org.uk/publication/finalised-guidance/fg21-1.pdf, p 9.

94 Ibid.

95 P Cartwright ‘Understanding and protecting vulnerable financial consumers’ (2015) 38 Journal of Consumer Policy 119; AK Aldohni ‘Loan sharks v short-term lenders: how do the law and regulators draw the line?’ (2014) 40 Journal of Law and Society 420 on supply vulnerability describing the lack of choice in markets as affecting consumers’ decision-making.

96 L Overton and L Fox O'Mahony ‘Stakeholder conceptions of later-life consumer vulnerability in the financial services industry: beyond financial capability?’ (2018) 41 Journal of Consumer Policy 273, in relation to equity release mortgages: Financial Stability Board ‘Consumer finance protection with particular focus on credit’ (2011), https://www.fsb.org/wp-content/uploads/r_111026a.pdf.

97 Wider ‘vulnerability’ assessment seems supported in JM Paterson and G Brody ‘“Safety net” consumer protection: using prohibitions on unfair and unconscionable conduct to respond to predatory business models’ (2015) 38 Journal of Consumer Policy 331.

98 FCA ‘FCA finds the Covid-19 pandemic leaves over a quarter of UK adults with low financial resilience’ (11 February 2021), https://www.fca.org.uk/news/press-releases/fca-finds-covid-19-pandemic-leaves-over-quarter-uk-adults-low-financial-resilience.

99 FCA Finalised Guidance for Firms on the Fair Treatment of Vulnerable Customers (2021).

100 Eg FCA Handbook MCOB 3A.8.4 on sale and lease-back credit arrangements; 4.7A on advised mortgage sales, FCA Handbook CONC 5.2A.22 when assessing creditworthiness in consumer credit arrangements.

101 FCA Finalised Guidance for Firms on the Fair Treatment of Vulnerable Customers (2021), para 2.19.

102 The regulation of products may stifle product innovation. But it can also be argued that the incentives of product providers are mis-aligned with investors anyway: M Cholbi ‘Paternalism and duties to self’; D Groll ‘Paternalism and rights’ in K Grill and J Hanna (eds) The Routledge Handbook of the Philosophy of Paternalism (Oxford: Routledge, 2018) chs 9, 10.

103 J Hanna ‘Hard and soft paternalism’ in Grill and Hanna, above n 102, ch 2.

104 Pensions Act 2008, s 3

105 Financial Services and Markets Act 2000, s 137D(1)(b).

106 FCA PS19/11: Product Intervention Measures for Retail Binary Options (29 March 2019), https://www.fca.org.uk/publications/policy-statements/ps19-11-product-intervention-measures-retail-binary-options.

107 ‘FCA bans the sale of crypto-derivatives to retail consumers’ (6 October 2020), https://www.fca.org.uk/news/press-releases/fca-bans-sale-crypto-derivatives-retail-consumers.

108 Retail investors cannot invest more than 10% of their net disposable assets in peer-to-peer loans: FCA Handbook COBS 4.7.7, 4.7.10.

109 Dworkin, above n 12.

110 FCA, above n 14, p 16.

111 D Muggë ‘Resilient neo-liberalism in European financial regulation’ in V Schmidt and M Thatcher (eds) Resilient Liberalism in Europe's Political Economy (Cambridge: Cambridge University Press, 2014) ch 7.

112 Art 24(1).

113 D Busch ‘MiFID II: stricter conduct of business rules for investment firms’ (2017) 12 Capital Markets Law Journal 340.

114 D Busch ‘The future of the special duty of care in the financial sector – perspectives from the Netherlands’ (2021) 32 European Business Law Review, forthcoming.

115 CR Sunstein and RH Thaler Nudge (New Haven, CT: Yale University Press, 2008); CR Sunstein and RH Thaler ‘Libertarian paternalism is not an oxymoron’ (2003) 70 University of Chicago Law Review 1159.

116 See CR Sunstein ‘Boundedly rational borrowing’ (2006) 73 University of Chicago Law Review 249.

117 M Quigley ‘Libertarian paternalism, nudging and public policy’ in Grill and Hanna, above n 102, ch 18.

118 S Agarwal et al ‘The age of reason: financial decisions over the life cycle and implications for regulation’ (Brookings Institution Working Papers, 2009) pp 51–101.

119 FCA Call for Input, above n 11, para 3.4, Q7.

120 Treasury Sarjeant Review of Simple Financial Products (2013).

121 MK Lewis ‘What can be done about Ponzi schemes’ in Understanding Ponzi Schemes (Cheltenham: Edward Elgar, 2016) ch 10.

122 L Fox O'Mahony et al ‘Conceptualizing the consumer of financial services: a new approach?’ (2015) 38 Journal of Consumer Policy 111; see also S Brown ‘Consumer credit relationships – protection, self-interest/reliance and dilemmas in the fight against unfairness: the unfair credit relationship test and the underlying rationale of consumer credit law’ (2016) 36 Legal Studies 230 focused on consumer credit.

123 Mentioned in Moloney, above n 8.

124 TI Palley Financialization: The Economics of Finance Capital Domination (London: Palgrave Macmillan, 2013).

125 On consumer credit: Aldohni, above n 45; Aldohni, above n 95; on housing: Nield, above n 40.

126 J Black ‘Enrolling actors in regulatory systems: examples from UK financial services regulation’ (2003) Public Law 63; ‘Mapping the contours of contemporary financial services regulation’ (2002) 2 Journal of Corporate Law Studies 253.

127 Bugeja, above n 15, only for complex products, ch 7.

128 FCA Handbook COBS 4.7.8.

129 Fox O'Mahony and Overton, above n 75.

130 Oehler and Kohlert, above n 27; see also AA Hung and JK Yoong ‘Asking for help: survey and experimental evidence on financial advice and behavior change’ in Mitchell and Smetters, above n 49, ch 9, arguing that mandatory advice is often ignored.

131 M Dixon Rethinking Financial Capability (2011) at https://www.ippr.org/files/images/media/files/publication/2011/05/financial_capabilities_1515.pdf.

132 J Gathergood ‘Self-control, financial literacy and consumer over-indebtedness’ (2012) 33 Journal of Economic Psychology 590.

133 Recognised in FCA Call for Input, above n 11.

134 P Ring ‘The regulation and governance of financial advice in Europe: the implications for the retail financial advice sector and its consumers’ (2018) 99 Governance and Regulations: Contemporary Issues: Contemporary Studies in Economic and Financial Analysis 33 (Emerald, 2018).

135 M-D Weinberger ‘Scope of protection: is there a ground for a single criterion?’ in Colaert et al, above n 18, ch 12; Bugeja, above n 15, ch 7.

136 Consistent with MiFID 2004, above n 6, Art 24(1). Paterson and Brody, above n 97, support the duty as a general ‘safety net’ for financial consumers; see also H Bateman and G Kingston ‘Regulating financial advice’ (2014) 4 JASSA The Finsia Journal of Applied Finance 7.

137 Busch, above n 113. The standard of care can be aligned with the FCA's new consumer duty, see above n 11, when it comes into force.

138 Insurance Distribution Directive 2016/97/EU, Art 20, also suggested as a harmonising baseline in EU regulation: see D Busch et al ‘An “assist-your-customer obligation” for the financial sector?’ in Colaert et al, above n 18, ch 14B.

139 ‘Just-in-time’ financial guidance and warnings seem to be proved useful to investors in empirical surveys: Fernandes et al, above n 69.

140 Regulation (EU) 2020/1503.

141 Choi, SJ ‘Regulating investors not issuers: a market-based proposal’ (2000) 88 California Law Review 279CrossRefGoogle Scholar.

142 Agarwal et al, above n 118.

143 Ibid.

144 Distance Marketing of Financial Services Directive 2002/65/EC, Art 6.

145 Such as subscription of securities, FCA Handbook PRR 2.2; p2p lending arrangements, CONC 11.2. A reflection period of seven days is offered for consumer mortgages: MCOB 6A.3.4.

146 Sunstein, above n 116; Campbell et al, above n 81; Cartwright, above n 95.

147 Basten, C et al. ‘Saving and portfolio allocation before and after job loss’ (2016) 48 Journal of Money, Credit and Banking 293CrossRefGoogle Scholar.

148 ‘Emotions cost investors dear, research finds’ (Financial Times, 23 October 2020).

149 MiFID Commission Directive 2017/593, Arts 9, 10; Maracci, A ‘European regulatory private law going global? The case of product governance’ (2017) 18 European Business Organization Law Review 305Google Scholar.

150 Commission Delegated Directive (EU) 2017/593 of 7 April 2016, Arts 9, 10.

151 FCA Finalised Guidance for Firms on the Fair Treatment of Vulnerable Customers (2021) paras 4.5–4.23.

152 Awrey, D ‘Towards a supply-side theory of financial innovation’ (2013) 41 Journal of Comparative Economics 401CrossRefGoogle Scholar.

153 Oehler, A and Wendt, S ‘Good consumer information: the information paradigm at its (dead) end?’ (2017) 40 Journal of Consumer Policy 179CrossRefGoogle Scholar.

154 FCA Call for Input, above n 11, Qs 26, 27.

155 Warren, E ‘Product safety regulation as a model for financial services regulation’ (2008) 42 Journal of Consumer Affairs 452CrossRefGoogle Scholar; EA Posner and E Glen Weyl ‘An FDA for financial innovation: applying the insurable interest doctrine to the twenty-first-century financial markets’ (2012), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2010606.

156 RP Buckley et al ‘Building fintech ecosystems: regulatory sandboxes, innovation hubs and beyond’ (2020) 61 Washington University Journal of Law and Policy, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3455872; DM Ahern ‘Regulators nurturing fintech innovation: global evolution of the regulatory sandbox as opportunity based regulation’ (2020), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3552015.

157 Chiu, I H-Y ‘A rational regulatory strategy for governing financial innovation’ (2017) 8 European Journal of Risk Regulation 743CrossRefGoogle Scholar.

158 Ibid; see also Allen, HJ ‘Regulatory sandboxes’ (2019) 87 George Washington Law ReviewGoogle Scholar.

159 OO Cherednychenko ‘The legal matrix for retail investment services in the EU: where is an individual investor?’ in Devenney and Kenny, above n 47, ch 12.

160 Samuel, R ‘Tools for changing banking culture: FCA are you listening?: why the FCA's IRHP mass dispute resolution system has failed and what the FCA can do about it’ (2016) 11 Capital Markets Law Journal 129CrossRefGoogle Scholar; ‘The FCA has now listened: banks, it is in your interests to listen too’ (2018) 13 Capital Markets Law Journal 3.

161 Cherednychenko, above n 159; Spindler, above n 30.

162 FCA Call for Input, above n 11.