Monitoring the success of policy initiatives to increase consumer understanding of financial services
| Date | 01 June 2003 |
| Published date | 01 June 2003 |
| DOI | https://doi.org/10.1108/13581980310810471 |
| Pages | 151-163 |
| Author | James F. Devlin |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation |
Monitoring the success of policy initiatives
to increase consumer understanding of
financial services
James F. Devlin
Received (in revised form): 28th November, 2002
Nottingham University Business School, Jubilee Campus, Nottingham NG8 1BB, UK;
tel: +60 3 2148 5288 ext. 167; e-mail: James.Devlin@nottingham.ac.uk
James Devlin is Reader in Marketing at
Nottingham University Business School.
His primary research focus concerns the
challenges and issues associated with the
marketing of financial services, and parti-
cular areas of interest include consumer
behaviour and policy issues in financial
services markets.
ABSTRACT
KEYWORDS: personal finance education,
financial literacy policy
One of the main statutory obligations of the
Financial Services Authority (FSA), the regu-
latory authority responsible for overseeing
financial markets in the UK, is to promote
public understanding of the financial system and
the services offered within it. As a result, the
FSA has embarked upon a personal finance
education programme to increase public aware-
ness and understanding of financial services. It
has done so in the knowledge that many consu-
mers and potential consumers of retail financial
services exhibit limited understanding and
awareness of financial services and the financial
system in general. Limited understanding on the
part of consumers has important implications for
consumer behaviour in financial services mar-
kets. Many consumers show limited interest,
make little effort to evaluate alternatives and
some even purchase financial services which
may be detrimental to their long-term interests.
This paper argues that, in order to be deemed
successful, policy issues aimed at increasing
financial knowledge should influence consumer
behaviour in retail financial services markets in
a number of ways, leading to more informed
and sophisticated buying behaviour. It places
the debate in a public policy and marketing
framework and analyses evidence of limited
understanding and past and planned consumer
personal finance education initiatives. The
paper then offers a review of consumer beha-
viour in retail financial services markets and
develops propositions as to how enhanced
awareness, interest and understanding may
affect such behaviour. Policy implications are
explored, including the proposed monitoring of
consumer behaviour variables in order to pro-
vide an insight into the degree of success of con-
sumer personal finance education initiatives.
INTRODUCTION
The purpose of this paper is to highlight
how the policies of the Financial Services
Authority (FSA) aimed at increasing public
awareness of the financial system and the
services available within it might be evalu-
ated by monitoring changes in consumer
behaviour in financial services markets.
Under the Financial Services and Markets
Act
1
(FSMA) the FSA, the regulatory
authority responsible for overseeing finan-
cial markets in the UK, has a statutory obli-
gation to promote public understanding of
Page 151
Journal of Financial Regulation and Compliance Volume 11 Number 2
Journal of Financial Regulation
and Compliance, Vol. 11, No. 2,
2003, pp. 151–163
#Henry Stewart Publications,
1358–1988
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