Woman on the bus using her phone

Rose Acton, Policy and Research Officer, Money and Mental Health

Making regulation work for real consumers

How financial regulation could level the playing field for people with mental health problems

Money and Mental Health recently responded to the Financial Conduct Authority’s (FCA) consultation on their future ‘mission’ – a great opportunity to have a say in how financial regulation should work and what the regulator should prioritise. It’s offered us an opportunity to reflect on what we’ve learned so far about how experiencing a mental health problem affects our ability to manage our money, and what regulators should do to make sure that the one in four of us experiencing mental health problems aren’t left with a poor deal.


Life can make it hard to be a ‘good’ consumer

The FCA, like other regulators, expect consumers to actively shop around to find the best deals. The idea of ‘engaged consumers’ lies at the heart of modern market regulation. But this principle fails to recognise that many people struggle to shop around or engage with markets for reasons beyond their control. Some people experiencing a mental health problem, for example, find their condition makes planning ahead, opening bills or processing complex information much more difficult than usual. Other people might find it hard to do what the market and regulators expect of them when they’re experiencing a physical illness, or if they have learning disabilities, or if they have just experienced a difficult life event like divorce or bereavement.

None of these people are being lazy, feckless or disorganised. Their circumstances simply mean they face real barriers – cognitive, practical, or psychological – that prevent them from engaging fully in the market, and getting the best deal.

At the moment, consumers in these difficult circumstances often find themselves pushed by default into more expensive products – for example, standard variable energy tariffs, which might cost hundreds of pounds a year more than fixed deals.

The task of regulators should be to make sure people aren’t left behind when life makes it difficult, or impossible, for them to engage.

While the FCA has already undertaken substantial work with the financial services industry to improve services for customers in difficult circumstances, we believe that all regulators must take a bolder approach to consumer vulnerability – in particular for people experiencing mental health problems, and recognise the challenges of real-life when they’re putting forward consumer remedies.


Regulating markets for the one in four of us with a mental health problem

The difficulties consumers face when experiencing a mental health problem are not barriers that can be overcome through willpower alone. What’s more, typical regulatory responses, such as providing more information to consumers about the product they are purchasing, are likely to not work, or even be actively harmful. A consumer struggling with motivation and attention span is less likely to be able to digest 10 pages of information than one.

While accepting that consumers have responsibilities, adaptations need to be provided for consumers in these circumstances to help them engage with essential products and services.

When people face cognitive and psychological barriers to being active, engaged consumers, both regulators and firms must take active steps to level the playing field and provide appropriate support. In the same way that Braille and screen readers make it possible for customers with visual impairments to engage with the services they need, we need to explore parallel adaptations to make sure the market works for consumers experiencing mental health problems.

The FCA and other regulators need to recognise these barriers to engagement and take action. Supporting the one in four of us who experience mental health problems to engage with products and services will not only help consumers to better manage their money and to get a better deal, but will create more inclusive, competitive and responsive consumer markets.


Want to find out more?

You can find our full response to the FCA’s consultation here. Our latest paper – Seeing through the fog – sets out the common ways mental health problems can impact financial capability, and the adaptations we think are needed, and we would love to explore further the implications for other regulated industries. If you work in the energy, telecoms or financial services sector and would like to discuss these issues with us, please do get in touch.