Katie Evans, Head of Research & Policy, Money and Mental Health
In case you missed it in the Budget - what is the Regulators' Pioneer Fund?
Hidden away in the technology section of today’s Budget, the Chancellor announced a new £10 million ‘Regulators’ Pioneer Fund’, billed as helping regulators to develop innovative approaches to get new products and services to markets.
It would be very easy to overlook this announcement. Regulation isn’t the sexiest subject at the best of times, and it was buried amongst big policy changes around housing and some good news on Universal Credit. But, with some luck, this little announcement could make a big difference to the ongoing unfairness that costs people experiencing mental health problems millions of pounds every year.
The hidden costs of mental health problems
Mental health problems don’t just affect our emotions; they also affect the way we think and make decisions. This shapes our ability to engage with markets, whether that’s finding the motivation to shop around and switch insurance or energy suppliers, or just struggling to open the bills or pick up the phone when something’s gone wrong.
“I find the process of hunting for deals overwhelming. My brain can crash, then I’ll just take whatever deal is closest to me. Or I’ll get stuck, and not be able to take any deal. Last time I needed a new mobile it was awful, it took me more than 6 months to decide which deal to get.”
For the 12 million consumers across the UK who are experiencing mental health problems, that often means paying more for services. People experiencing mental health problems are also more likely to be on low incomes in the first place, so a greater proportion of their monthly budget will be taken up by paying for the essentials, leaving less for the enjoyable things that might help them to stay well.
We’ve been arguing for an inclusive approach to the regulation of these essential markets, encouraging both suppliers and regulators to think about how they can design services and processes so they work for everyone.
Traditionally, the role of regulators was seen as setting the rules for a given market – the minimum standards companies had to meet to sell energy or financial services to a consumer – and then letting competition decide what services should look like. We have increasingly realised, however, that sometimes innovation isn’t best fostered by competition.
Instead, when we’re tackling big issues which affect companies right across an industry, collaboration can be helpful. If the Pioneer Fund can support regulators to undertake more work like the TechSprint we held with the Financial Conduct Authority earlier this year, this can only help to build understanding of the needs of vulnerable consumers across markets, and to encourage firms to build new products and services which really meet their needs. Left unchecked, innovation will often chase the biggest profit. This Regulator’s Fund could help rebalance that, and create an incentive for innovation which could drastically improve lives.
Answering the big questions
Lack of cash isn’t the only thing holding back innovation. At our TechSprint follow-up event with the FCA last week, we found that big questions around data sharing and privacy were holding up progress.
Markets for essential services are already changing at an incredible pace thanks to new data driven technology, including Artificial Intelligence (AI). Smart meters, though not super exciting in their first iteration, are gradually changing the way we think about our energy use. Open Banking could have a much more radical impact on the way we manage our finances. Across a whole range of markets, being able to access data about our own usage and share that with a wide range of suppliers opens up the possibilities of personalised contracts and pricing, super-simple automated switching, and potentially stronger competition and better deals across a wide range of services.
Done well, this could offer enormous benefits to people experiencing mental health problems, for whom prompts to shop around and switch can be, not just unrealistic, but even a source of guilt. In an ideal world, an algorithm could do the hard work of finding the best deal, and we could rely on sharing data electronically rather than taking meter readings and comparing complex contracts.
However there are also risks in this innovation. Without careful regulation to ensure that data can’t be used to discriminate against certain types of consumer, it’s possible that people could be taken advantage of. There’s equally a risk that, if these services aren’t designed with ‘vulnerable consumers’ in mind, engaged customers will leverage the tools to get ever-better deals, at the expense of those less able to shop around.
A leadership role for government
It’s great to see the government taking these risks seriously, and promising to create a new Centre for Data Ethics and Innovation. We’re also very excited by the potential of new ‘data trusts’ which could facilitate access to data for the purpose of fostering innovation. We’ve previously called for the creation of a similar scheme to share financial transactions data, and hope at least one of the new trusts will make this type of data available both to researchers seeking to better understand the financial situations of UK households, and the charities and firms trying to help.
These Budget announcements could be the start of a really interesting, and much needed, conversation about how we use technology to make Britain’s consumer markets more effective and fair for everyone. We hope it marks a shift towards cross-sector collaboration between regulators, and a focus on innovation in markets, rather than endlessly asking consumers to do more. The forthcoming Consumer Markets Green Paper is an opportunity to pick up these themes and show real leadership.