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The purpose of this paper is to examine the approaches to consumer protection in UK financial services before and after the global financial crisis.

This paper reviews the literature on behavioural economics and psychology, and uses it as the basis for a critique of the UK's approach to the supervision of financial services firms and the protection of their consumers.

Non‐interventionist approaches to consumer protection, which are based on the traditional theories of the law and economics movement, have failed. As a result, there is now a shift in thinking towards more interventionist approaches.

By understanding the likely impact of the regulatory reforms the academic research community can assist the regulator to understand the best way to ensure desirable outcomes for users (consumers) of financial services.

The moves to reform UK financial regulation after the crisis have only recently got under way and a lot of the reforms have not been widely debated or written on.

Purpose – The global financial crisis of 2007–2009 has highlighted the need for reform of financial regulation in several jurisdictions across the globe, including the United Kingdom and the United States. This chapter argues that the reforms need to be comprehensive and will therefore have to cover several aspects of financial regulation.

Design/methodology/approach – The chapter critically examines some of the areas where reforms are most needed. This involves consideration of the merits and demerits of multi-functional or universal banking. It also involves consideration of the systemic and other problems that arise as a result of the increasingly international nature of banking and other financial services. Moreover, it examines the need for regulators to understand and keep pace with financial innovation. Furthermore, it involves discussion on the need to improve corporate governance and remuneration policies in banks and other financial services providers as well as the need for adequate arrangements for dealing with bank insolvencies and collapses.

Findings – Market fundamentalism and over-reliance on the alleged self-correcting powers of the market have led to excessive deregulation and liberalisation in world financial markets. Financial regulatory reforms will therefore have to be substantial and comprehensive to properly address the problems caused by excessive financial liberalisation.

Originality/value – The chapter examines significant issues that academics, regulators and policy makers should consider when devising or implementing reforms designed to prevent, or reduce the impact of, financial crises in the future.

International banking refers to the activities of providing financial services (banking) to clients (both institutional and individual) located in many different countries. This encompasses a wide range of activities, including transactions with foreigners and domestic residents relating to deposits and lending in domestic and foreign currencies, facilitating foreign currency transactions and foreign exchange risk hedging, participating in international loan syndications, and facilitating international trade finance for clients.