Edited by Geraint Howells, Iain Ramsay and Thomas Wilhelmsson
Chapter 15: What next for the financial consumer: more disclosure? Caveat vendor? FinTech online?
Since the advent of modern securities regulation in the 1930s, disclosure has been king in terms of regulation. In the last decade regulators and policy-makers have accepted the arguments of consumer advocates and the insights of behavioural research, showing that with retail investors or financial consumers, disclosure does not work well. It is insufficiently protective, given the evidence of modest levels of consumer financial literacy. This chapter looks at regulatory strategies other than disclosure, which assume a more interventionist approach. These include bans on conflicted remuneration, product design and distribution obligations and regulators’ product intervention powers. Indeed, it might be argued that regulation now requires caveat vendor or ‘seller beware’ rather than the caveat emptor ‘buyer beware’ that underlies disclosure. Against this background we also consider the implications for the financial consumer of a variety of digital economy approaches to the sale and distribution of retail investments.
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