Financial Inclusion, Financial Education, and Financial Regulation in the United Kingdom

Sue Lewis and Dominic Lindley
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Sue Lewis: Asian Development Bank Institute
Dominic Lindley: Asian Development Bank Institute

No 544, ADBI Working Papers from Asian Development Bank Institute

Abstract: The United Kingdom (UK) has one of the largest financial services sectors in the world, and strong consumer protection regulation. Yet, despite nearly 2 decades of financial inclusion policymaking, persistent problems remain. Many individuals, often the most vulnerable, are unable to get financial products and services that meet their needs at affordable prices. New forms of exclusion are emerging as digital technology advances and risk profiling becomes increasingly sophisticated. The self-employed face particular problems, having high levels of unsecured debt and being less likely to have pension savings than employees. There are long-standing competition and conduct problems in the market for small business finance, and lending to small firms has both decreased and become more expensive since the financial crisis of 2007–2008. Despite many small businesses having similar levels of financial sophistication as retail consumers, the regulatory system does not protect them to the same degree. Financial capability is low among the UK population. Often, the groups with the lowest capability are also those at most risk of financial exclusion. Policy recommendations include: better coordination for financial inclusion policies; support for teaching financial education in schools; more progressive savings incentives; basic banking to meet the needs of the most vulnerable; streamlining government support for small businesses; and specialized advice and financial education for small businesses and the self-employed.

Keywords: financial inclusion; financial education; financial regulation; financial services (search for similar items in EconPapers)
JEL-codes: G21 G28 L53 O16 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2015-10-22
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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