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Personal general insurance policies are not subject to statutory regulation. There is instead a system of voluntary self‐regulation and the question arises as to the effectiveness of this regime. This paper explores that issue in relation to payment protection insurance (PPI) and suggests, on the basis of complaints coming before the Insurance Ombudsman Bureau, that the consumer may still be inadequately protected. The paper acknowledges the work of the Association of British Insurers' (ABI) Code Monitoring Committee and the likely effect of the June 1996 statement by the ABI on payment protection insurance but suggests that because of the way PPI is sold it is unlikely that there can ever be full protection for the consumer. This, it is suggested, makes the role of the Ombudsman as an adjudicator in default all the more important. Equally important is the need for the industry and the bureau itself to publicise the service which it offers.

The study examines influence of behavioural economic theories of add-on goods and contingent charges on the regulation of two touchstone markets in the UK. These markets, the payment protection insurance (PPI) market and the market for overdrafts can both be characterised as add-on goods, have displayed excessive levels of profitability and been the focus of continuing and substantial public mis-trust. Despite these similarities, the regulatory treatment of these two markets has been very different. The purpose of this paper is to explore the context of these cases and examine why these differences in regulatory reporting have developed.

The research questions are examined through a detailed review of the regulatory reporting in the UK PPI and overdraft market. This review of over 20 regulatory reports, numerous enforcement actions, associated legal proceedings and related international evidence is employed to determine commonalities and differences in the regulatory actions proposed, motives adopted and success of these regulatory processes.

It is reported the dynamic and fragmented regulatory structure, multiple policy agendas and a successful legal intervention have all influenced how these financial services markets have been regulated and behavioural economic concepts applied. In particular aspects of overdraft markets remain challenging to address as it is still possible to exclude competition within aftermarkets. The regulatory intervention into PPI markets by contrast addressed concerns raised by add-on good theory and amended the form of distribution underlying this market more directly and successfully.

There have been numerous excellent reviews of behavioural economics and finance published on a diversity of topics. Despite such a wide coverage, a relatively under-researched aspect of this literature remains the application of these relatively new theoretical insights within markets and how these have influenced regulatory practice. This review of regulatory reporting addresses this gap in the literature through considering two of the most problematic financial services markets of the last decade in the UK.

The purpose of this paper is to discuss R (on the application of British Bankers Association) v. Financial Services Authority and another (Queens Bench Division: Administrative Court: Mr Justice Ouseley). Date of Judgment: 20 April 2011.

The paper outlines the facts surrounding the case and comments on the decision.

This is a lengthy judgment that is dense in closely reasoned interpretative analysis of the Financial Services and Markets Act 2000 schema for regulation of the conduct of retail financial business and attendant redress mechanisms.

This keenly awaited decision raises several issues of wider public interest about the design and operation of the regulatory environment for retail finance in the UK. In the context of the FSA's emphasis over the past few years of its “Treating Customers Fairly” programme of work the legality of the action taken by both FSA and the Financial Ombudsman Service (FOS) to effect a broad measure and depth of consumer redress in respect of what they judged to be widespread incidence of inappropriate sales of payment protection insurance (PPI) by banks in particular came under intensive scrutiny from the Court in what is a fascinating judgment for regulatory lawyers.

The purpose of this paper is to explore how psychological variables are related to real-life insurance consumption. Specifically, the authors focus on whether emotions and psychological traits can improve the predictability of insurance demand, taking traditional socioeconomic variables under control.

The approach used was in-person survey, based on a traditional questionnaire, the Barratt Impulsiveness Scale and a psycho-physiological task (Iowa Gambling Task (IGT)).

A selective role of emotions and psychological traits has been proven to exist when comparing different insurance policies. Life and casualty insurance are affected by emotional arousal to losses; indemnity insurance by fear of the unknown, whereas health insurance by impulsivity.

The findings indicate that individual insurance consumption may be amplified by not cognitive components. Future research should concentrate on testing the effect of further psychological traits related to pure risk coverage.

The results may be of interest for insurers in order to know what drives insurance demand with respect to different kinds of pure risks.

For policymakers, it is important to understand how psychological factors affect consumer behavior in order to incorporate such perspective into modern insurance policy measures. An analysis of such factors may also increase the self-consciousness of insurance consumers and enrich consumer self-protection.

The authors propose an interdisciplinary approach to analyze insurance demand and test different kinds of insurance coverage, suggesting not homogenous hedging behaviors in relation to specific ambiguous events.

This paper aims to explore the impact of the internet and related information and communications technology developments on how financial services (FS) are distributed and how customers are managed, in particular, not only how companies can differentiate between “good” and “bad” customers and manage them appropriately but also how customers can be “bad” and escape the consequences. It also explores how changes in information asymmetry between suppliers and customers affects who gains or loses from the relationship between them.

The data for the article are from the authors’ consulting and conference chairing experience. The article is in the form of a reflection on this, rather than a hypothesis-based research article.

One of its findings is that those responsible for controlling damage done to companies by fraudulent or negative value customers (typically those managing underwriting or risk) and those responsible for recruiting, retaining and developing customers (typically marketing, sales and customer service) do not work closely enough together, and this can lead to not only damage to shareholder value but also damage to the customer experience.

The paper identifies the need for more research covering the processes, data, analysis, systems and strategies required to manage both good and bad customers and the practical problems of implementation.

The main practical implication is that in designing products and the customer service experience, FS marketers need to take into account much more systematically the “dark side” of customer activity.

This paper is one of the first to explore its issues in detail.

The purpose of this paper is to consider in the light of the post August 2007 banking crises, how “fair” access to retail banking services for British households and small‐ and medium‐sized enterprises (SMEs) can be assured.

The current responsibility for assuring the bank customers are “treated fairly” belongs to the Financial Services Authority (FSA). The paper argues for the establishment of a banking commission to regulate retail banks as utilities, leaving the FSA to concentrate on prudential (“risk based”) supervision of bank and non‐bank financial institutions.

If access to payments services is infrastructural and access to finance is regarded as essential in a modern society, then retail banks should be regulated as utilities.

The banking crisis led to calls for banks to maintain lending to SMEs and households (especially mortgages). This implies that access to finance, like access to water and electricity, should be assured and that customers should be protected against the “monopoly” powers of large suppliers. Hence, retail banks are utilities and should be regulated as such.

This paper aims to investigate the problem of searching for the equilibrium in the housing market, the mortgage lending market and the insurance market in the process of selling the residential property. Three classes of markets are established in three modes, which reflect the interdependence of the firms’ interests in these markets through the parameters of their integration. The paper aims to determine the prices in these markets on the basis of the compromises among the conflicting interests of the related firms, and, in addition, to assess the rationality of integration for firms, which are participants in the process of selling the residential property.

On the basis of the revenue sharing contracts and the supply chain coordination methods, the optimization models of the housing realtor, the mortgage bank and the insurance company are developed. The models consider the interdependence of the firms’ interests, the monopolistic competition in these markets and the conditions of the firms’ individual rationality in the interaction process.

The results of the study are as follows. First, as a consequence of a decrease in the demand curves in monopolistic competition, the housing market, the mortgage market and the insurance market are interconnected, therefore, the optimization models of the firms in these markets are interdependent through the revenue sharing parameters. Second, in these markets the individual firms’ sales optimums are not identical, therefore, the interests of the firms are contradictory. Third, in the realtor-bank-insurer system, the equilibrium satisfies the condition of zero revenue sharing payments between the agents; additionally, the equilibrium prices in these markets are mutually independent. Fourth, in the disequilibrium, the prices in these markets are interrelated, i.e. the price in one market increases with the price in another market, if the payment is directed from the former to the latter, and vice versa.

The results of the study are applicable in practice, if the markets demonstrate the decreasing demand curves and if the needs of buyers in related markets are interconnected.

The interaction between the realtor and the mortgage bank enables the realtor to raise its sales and the bank to increase in the number of loans, i.e. it leads to growth of their profits. The interaction between the insurer and the mortgage bank enables the insurer to increase in the number of policies and the bank to reduce the risk of lending, i.e. it leads to an increase in their profits. The identification of the individual firms’ sales optimums enables agents to determine the terms of the contracts of these interactions, which are compromises from the positions of each transaction participants. In addition, the firms’ optimums indicate the predictions of the equilibrium market prices.

In comparison with the studies in the contract theory framework, first, the mathematical description of the complicated (three-agent) system of interactions is proposed; second, the optimal choice non-linear models are developed, which take into account the non-linear demand functions in the monopolistic competition markets; third, the equilibrium of the agents with contradictory interests is investigated. In the later item, the authors establish that the revenue sharing contracts in the complimentary demands functions systems do not require the payments between the participants. Fourth, the authors prove that, in the equilibrium of these markets, the housing prices, the mortgage interest rates and the insurance rates are mutually independent and equal to the prices in the isolated markets.

The purpose of this paper is to chart the development of bancassurance as a method of selling insurance and how it fits within the regulatory environment in Ireland.

General review of the leading financial institutions retailing insurance in Ireland and their respective processes in retail distribution.

Unlike in Europe where bancassurance involves the bank creating insurance products, in Ireland many banks engage insurers to create product to be sold via banking network, call centre or online. Whitelabeling insurance products allow the bank and insurer to enter or exit the market. In developing a bancassurance product, fundamentals need to be in place for success. The regulatory environment also does not favour banks creating insurance products; hence, this method is suited to the Irish market based on market size and existing distribution channels.

Based on a general review of the market, past and present, it does not take into account future developments of the banking sector which is subject to change post the EU banking crisis.

The paper establishes the current trend of banks entering the insurance market in Ireland.

Based on observation, general literature review and the current regulatory requirements to retail insurance in Ireland, the paper offers a perspective of market entry for a bank to sell insurance.

The purpose of this paper is to provide a practitioner's guide to mortgage regulation.

The paper explores the mortgage code and the road to statutory regulation.

It was found that the future of mortgage regulation rests partly with those policy makers who decide that change is needed and partly with those who work in the industry. Good firms who strive to run better businesses and deliver improving service to their customers have little to fear from rising regulatory standards as they will always be at least one step ahead of the regulator. What is required is a weather‐eye on the changing market and economic conditions, a strong, unifying voice to campaign on behalf of the industry and a clear commitment to work for the good of the customer. That way, whilst some times will be good, and others will be less so, there will still be business to be done.

The paper offers practitioners a guide to mortgage regulation, advising on what firms need to do, key issues for mortgage intermediaries and the need to manage the sector's reputation.

The Plaintiff, J. Rothschild Assurance plc, is a life assurance company. This case arose out of the review of pensions mis‐selling and the Plaintiff sought to be indemnified by its professional indemnity insurers for the losses it had or may yet incur as a result of having to compensate investors pursuant to the review of pensions mis‐selling. The first Defendant, Mr Collyear, is a representative Lloyd's Underwriter, as are some of the other Defendants (the remainder of the Defendants being insurance companies). All the Defendants had subscribed to three ‘claims made’ indemnity insurance policies which together extended cover of some £20m, covering the period 1st February, 1993 until 31st January, 1994 and were identical in all terms material to this action. Because the Plaintiff was seeking indemnity in respect of so many different individual cases of compensation Mr Justice Clarke had, at an earlier hearing on 10th February, 1998, ordered a maximum of ten sample claims to be tried and all other proceedings stayed. It subsequently transpired that both parties agreed that neither were in a position to have a full trial of the facts of these cases but they nonetheless proceeded to a hearing of these sample claims which were used here in this case as a vehicle to isolate, argue and resolve certain basic themes and issues which were common to the claims in the stayed proceedings.