Input to CMA Vulnerable Customers team

A gap in our collective understanding of the personal characteristics of ‘average’ and ‘vulnerable’ consumers?

I welcome the increased focus that the CMA has brought to supporting vulnerable consumers, as exemplified by Consumer vulnerability: challenges and potential solutions (Feb 2019). It is particularly welcome to see the distinction made between ‘market-specific vulnerability’ and ‘vulnerability associated with personal characteristics’ - and the increased interest in the latter.

It is understandable that only a few specific vulnerabilities could be explored in this initial paper and there is a strong case to be made, and effective lobbying organisations doing so, for each of mental health problems; physical disabilities; age; and low income. However, there is a missing – and underpinning – vulnerability: around half of all adults in the UK only have the everyday numeracy level that we expect of primary school children.

As founding Chief Executive of National Numeracy, I have been making the case for a greater recognition of this issue – and for behavioural interventions to address it - for the past eight years. Almost everyone I have spoken with, from job seekers to cabinet ministers, agrees that a basic understanding of numbers and data is necessary (but not sufficient) to enable us all to make informed consumer choices. However, I have been consistently surprised by the stark contrast between policy makers’ and regulators perception of the current capacity of adults in the UK to understand numbers or data, and the reality[1]. I have also become increasingly concerned that this contrast has led to policies and practices across a wide range of domains that are built upon assumptions that are often false[2].

Please have a look at Appendix 1 to check your own perception of the current capacity of adults in the UK to understand numbers and data.

I believe that the impact of future CMA analyses and subsequent remedies will be increased if this factor, which is the biggest single consumer vulnerability identified by FCA Occasional Paper 8 (2015) – see Appendix 2 - is included. This applies to future work to define the personal characteristics of the ‘average consumer’ alongside work looking at vulnerability specifically.  

I will hand over as Chief Executive of National Numeracy at the end of June. I am now keen to use all I have learned about this issue - and potential solutions - to enable the CMA, the FCA and a wide range of other stakeholders to ensure that collectively we are ‘in a better position to help those members of our society who are at greatest risk of suffering from poor market outcomes.’ This is particularly relevant in the coming months and years as we attempt to enable people to repair their personal and household finances – finances that in many cases were already in a perilously fragile state pre-Covid-19.

Appendix 1:

 To exemplify the contrast between perception and reality, here are five questions from the National Numeracy Challenge that were used in an Ipsos-Mori poll of adults across the UK last year.

 Please spend a minute or two to estimate what proportion of the representative sample of the UK population answered the five questions correctly – using a calculator or their phone - answer in endnote [i] .

 Appendix 2:

[1] See https://www.nationalnumeracy.org.uk/sites/default/files/building_a_numerate_nation_report.pdf

[2] Daniel Kahneman’s concept of WYSIATI and Philip Tetlock’s ‘Tip of the nose view’ both go a long way to explaining how this perception / reality mismatch leads to policy underpinned by false assumptions.

[i] Only 6% of the representative sample of the UK population answered all 5 questions correctly. (4/5 = 14%, 3/5 = 24%, 2/5 = 27%, 1/5 = 19%, 0/5 = 10%). This is broadly in line with the latest government-commissioned data on adult skills levels and also data on over 200,000 adults who have engaged with the National Numeracy Challenge.