The financial capability project: EDU-Regulating consumer financial markets through the democratisation of financial knowledge

The thesis examines the emergence and development of the financial capability project in the United Kingdom. It investigates how consumer financial literacy education came to be increasingly deployed by policy makers and financial regulators to govern financial markets and to protect consumers. The thesis focuses on and unpacks a number of different practices and processes that constitute and support the project on financial capability. It looks at some of the predominant discourses surrounding the legitimization of consumer financial education and explains the underlying rationale for this novel regulatory approach.

To explore different configurations of regulatory techniques used to protect consumers, the thesis studies three sites where distinct financial capability initiatives were rolled out in the UK context. The first site unpacks the financial capability measure and documents in detail the financial knowledge practices that are used to define and determine what is considered to be high or low levels of consumer financial capability. The second site describes how the project on personal finance education was carried out in English schools. It interrogates the activities of Personal finance education group (Pfeg) – the principal promoter of financial school education – and exposes different ways in which Pfeg’s major financial donors have informed and shaped the UK’s national strategy on financial education at schools. The third site looks at the regulation of the provision of financial advice in the UK. It probes into the assumptions about consumer financial decision-making that form the basis and rationale for consumer protection and state intervention via the provision of financial advice.

The thesis terms these sites as ‘edu-regulatory’ in order to illustrate how financial information, financial education and financial advice are utilised to govern consumer behaviour and financial markets. The analysis of three edu-regulatory sites shows that the underlying rationale for this novel regulatory approach is the democratisation of financial knowledge. The project on financial capability presupposes that greater consumer access to financial information, financial education, and financial advice equips consumers with knowledge, skills and attitudes necessary to govern themselves and financial markets.

Borrowing ideas and findings from social studies of finance, the thesis cautions against this newly emerging approach to consumer protection. It argues that the project on financial capability promotes access to financial knowledge which is highly de-contextualised. This de-contextualisation simplifies consumer financial decision-making and ignores the socio-economic, cultural and political environment within which consumers make their choices. Despite grand claims about consumer empowerment that tends to accompany the financial capability project, the thesis highlights important limitations to such edu-regulatory techniques. It argues that consumer decision-making is highly complex and contextual, thus, financial knowledge gained as a result of financial capability programmes will always intersect with the environment. Consumer protection policies based on edu-regulation has the potential to shift regulatory focus from structural problems present in financialised, political economies to individuals. The financial capability project largely ignores the importance of these circumstances to financial decision-making processes. Instead, it mis-attributes them to consumers’ lack of understanding and their inability to successfully navigate the financialised world. The thesis suggests that consumer financial education fails to strengthen consumer protection or reduce consumer exposure to financial risks. The financial capability project contributes to further marginalisation of consumers who are the least capable of managing their financial and economic lives through mere information, education and advice.