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date: 23 January 2021

Abstract and Keywords

This Chapter examines the paradox underlying the regulation of consumer interest in financial markets. It explains how consumer interest in financial markets is shaped by the ‘financialization’ of welfare provision. The discussion begins by considering the paradoxical need to regulate to reduce investment risk while also regulating to retain risk. The Chapter then looks at consumer interest in goods and services markets, the concept of ‘financial citizen’ and its limitations especially the insights of behavioural psychology and financial literacy, financialization, and citizenship. It also describes the ‘financial citizen’ as protected investor and as well-informed and confident investor or consumer. Finally, it analyses the regulation of the ‘financial citizen’ since the 2007–09 global financial crisis, with reference to the creation of consumer protection authorities, product intervention, mortgage-lending practices, simplified product disclosure, mitigation of conflicts of interest in financial advice, the distinction between wholesale and retail investors, and institutional restructuring.

Keywords: regulation, consumer interest, financial markets, financialization, welfare, financial citizen, global financial crisis, consumer protection authorities, investment risk, investors

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