A broad range of financial products and employee benefit packages are designed to help employees manage their finances and wellbeing through different life stages. Regulators play a key role in the development of such products by ensuring vulnerable or disadvantaged groups are not unduly excluded from access to a loan or service.
Listed below are the key regulatory trends impacting the financial wellbeing theme, as identified by GlobalData.
Occupational health (OH) requirements
Employers have a duty of care to their employees and are legally required to take steps that are reasonably possible to ensure their health, safety, and wellbeing at work. They may employ OH professionals to implement health and safety regulations and promote wellbeing. In addition, when the work involves certain health risks to employees or is known to harm health in some way, employers must have an OH surveillance programme in place.
Besides providing a safe workplace to employees, many businesses focus their efforts on assessing an employee’s fitness to return to the workplace following a prolonged period of illness, making the necessary adjustments to the workplace, or managing long-term absence.
A survey carried out in 2020 by the Chartered Institute of Personnel and Development in partnership with Simplyhealth indicates that 45% of UK individuals believe their employer does not make enough use of OH to promote “good work,” such as promoting work/life balance practices. This indicates that many employers are reactive, tackling issues when they arise as opposed to working towards more preventative approaches that minimise health risks and improve wellness.
Insurers can help employers understand the risks associated with OH matters and help them mitigate and manage these risks. Insurers normally pay out for incidents if employees get injured at work. The provision of early medical diagnoses and mental health counselling from insurers can also help prevent employees from developing more serious conditions.
General Data Protection Regulation (GDPR)
Non-compliant firms may face fines of up to €20m ($23m) or up to 4% of the company’s annual global turnover under GDPR for the preceding fiscal year whichever is higher. Insurance firms would normally not cover the penalty costs of non-compliant businesses unless they are located in Norway or Finland. Given the nature of the data being gathered through wellbeing apps, activity trackers, and wearable devices incorporated in insurance policies, all companies involved must comply with GDPR standards.
GDPR is beneficial to account holders, reassuring them that their personal data will be used and stored responsibly. The regulation could boost uptake of personal financial management (PFM) services that typically need to aggregate and mine the transaction data of users to operate.
The number of countries adopting stringent data protection legislation is on the rise. China’s data privacy law, which was also introduced in May 2018, was heavily influenced by GDPR. Similarly, legislation that closely aligns with GDPR was introduced in Japan in July 2018.
Many financial regulators have enhanced the duty of care obligations financial services providers have to their customers particularly those offering credit or investment products. The implementation of Future of Financial Advice reforms in Australia, the US Consumer Financial Protection Bureau, the Markets in Financial Instruments Directives in the EU, and the UK Retail Distribution Review have all imposed greater duty of care obligation upon financial services companies since the global financial crisis. Gone are the days when a lender or investment provider could offer their products without care for the burden or risks their clients are taking on. Much of the extra data analysis required, financial literacy obligations, and hardship support complement a more sophisticated financial wellness proposition.
This is an edited extract from the Financial Wellbeing – Thematic Research report produced by GlobalData Thematic Research.