Stakeholder Conceptions of Later-Life Consumer Vulnerability in the Financial Services Industry: Beyond Financial Capability?

Abstract

When the newly re-constituted UK financial services regulator–the Financial Conduct Authority–was launched in 2013, it promised to adopt a new approach to its “consumer protection” objectives. This shift included articulating a new conception of consumer vulnerability, beyond narrow, individualistic, conceptions of vulnerability based on (limited) financial capability, towards a broader conception which takes account of the connection between individual circumstances, situations, and market factors in causing or exacerbating manifestations of consumer vulnerability. Drawing on new empirical research with later-life financial services stakeholders and consumers, this article examines the extent to which equity release stakeholder perceptions of consumer vulnerability align to this new regulatory philosophy, and to the realities of consumer experiences. Our findings indicate that, in contrast to the FCA’s new, broader understanding of consumer vulnerability, the stakeholders in our study tended to understand vulnerability through a narrower lens, focusing predominantly on “information vulnerability,” or on whether or not the consumer “knows what they are doing.” This conception supports the assumption that providing financial advice is sufficient intervention to ensure good consumer outcomes. This assumption is also at odds with our earlier consumer study findings, which revealed a much wider set of vulnerabilities amongst equity release consumers. We reflect on the implications of these findings for the development of the later-life financial services industry, in ways that can more appropriately serve the needs of this consumer population.