Consumer Finance

The decisions that individuals make in economic life are some of their most important – choices over banking, credit, insurance, investments and retirement savings – have among the most meaningful impacts on people’s welfare.

In the area of consumer finance, London Economics advises on consumer policy directed towards improving individuals’ decision-making and redressing individuals’ problems when they face financial difficulties. Such policy may be aimed directly towards consumers or firms.

We provide research in a variety of consumer finance subsectors, including:

  • Consumer credit
  • Mortgage credit
  • Insurance
  • Banking services
  • Personal debt and bankruptcy

In so doing, we use a range of research techniques, drawing on complementary expertise in behavioural and experimental economics, in which we have pioneered the use of the latest analytical techniques aimed at understanding individual economic behaviour in public policy.

Recent projects include:

Study on Means to Protect Consumers in Financial Difficulty: Personal Bankruptcy, Datio in Solutum of Mortgages, and Restrictions on Debt Collection Abusive Practices – this Report examines Europe’s formal mechanisms which allow consumers to return to a financially sustainable path by eliminating some or all of their debts, including providing a comprehensive description of the availability and use of personal bankruptcy and datio in solutum solutions of mortgages as legal solutions to problems of over-indebtedness faced by a number of consumers in the EU; and details the nature of the solution, the conditions the debtor needs to meet to access the solution, the legal, financial and other consequences of having used a particular debt solution, and the effectiveness of such solutions in practice, and identifies best practice models.

Study on the Impact of Directive 2007/64/EC on Payment Services in the Internal Market and on the Application of Regulation (EC) No. 924/2009 on Cross-border Payments in the Community – This study, undertaken with iff and PaySys, examines the effects of Directive 2007/64/EC on payment services in the internal market (PSD) and Regulation (EC) No 924/2009 on fees and charges for cross-border payments (Regulation 924) and identifies a number of potential amendments to the current version of the PSD.

Funding Debt Advice in the UK – A Proposed Model  – The Money Advice Service (MAS) commissioned London Economics to examine how the costs of debt advice work undertaken by MAS could be allocated across a spectrum of creditors, whilst also considering the allocation of the debt advice costs within the current FSA fee blocks. The study concludes that Bank of England data on lending to households is the most appropriate data to use when assessing the level of borrowing accounted for by different creditor types.

Basic Banking Services – This briefing paper examines the current state of play in the access to basic banking services, as well as the expected benefits of providing such access for citizens as well as for cross-border trade, in particular e-commerce. It also identifies the banking services that would ideally be covered by any initiative and the main hurdles met by citizens accessing bank services in Member States in which they are not permanent residents.