Commission bans and consumer financial protection

Albert Erasmus Grafe

ERES from European Real Estate Society (ERES)

Abstract: Financial literacy is seen as root cause for false household portfolio choices and thus wealth and retirement discrepancies. However, the increasing literature on financial literacy fails to recognize the fundamental caveat of financial consumer protection: commissions based financial advice. Many countries such as the UK or the Netherlands have recognized the innate conflict of interest between financial advisors and their customers that comes with a commissions-based system. In response, commission bans were introduced. To analyze the effect of commission bans on portfolio choices we conduct a difference-in-difference panel regression utilizing data from countries that have and haven’t introduced commission bans. The results indicate that commission bans - unlike many forecasts - have not negatively impacted consumers and the financial industry.

Keywords: Commission bans; Consumer financial protection; Financial literacy; Household portfolio choices (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2022-01-01
New Economics Papers: this item is included in nep-fle and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:2022_159

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