Protecting consumer financial well-being

By Andrew Godwin

HAVING PREVIOUSLY DISCUSSED using plain language for financial consumer protection in relation to disclosing risks associated with complex financial products (China Business Law Journal volume 2, issue 8: Plain language in English and Chinese), this Lexicon column explores an increasingly important aspect of financial consumer protection – the concept of financial well-being – and the question of whether it should be reflected in regulation. It examines the issues by comparing current regulatory frameworks in Australia and China.


The concept of financial well-being is expressed in various terms, such as “financial health”, “financial resilience”, “financial fitness” or an absence of “financial stress”. Financial well-being builds on previous concepts developed in the past two decades. These concepts include “financial literacy” and “financial inclusion”.

It is generally accepted that there is a causal relationship between financial well-being and mental well-being and physical well-being. In other words, financial stress leads to mental and physical stress and vice versa. Accordingly, financial well-being is increasingly recognised by policy makers as an important outcome for financial consumers.

The concept of financial well-being, however, is not easily defined. In part, this is because determining an individual’s financial well-being inevitably involves a subjective assessment by that person. Although various objective measures can be adopted to determine financial well-being, such as levels of debt and savings, it is necessary to recognise that a person’s financial well-being is a state or situation that is subjectively perceived or experienced. Indeed, two people with objectively similar financial situations may have significantly different perceptions in respect of their financial well-being. In addition, it is important to recognise that the concept of financial well-being is dynamic and temporal in nature; in other words, it is likely to change over time as a result of a range of factors, including events such as the death of a close relative, loss of employment, economic changes and downturns – or even changes in an individual’s attitudes or beliefs.

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葛安德 Andrew Godwin

Andrew Godwin previously practised as a foreign lawyer in Shanghai (1996-2006) before returning to his alma mater, Melbourne Law School in Australia, to teach and research law (2006-2021). Andrew is currently Principal Fellow (Honorary) at the Asian Law Centre, Melbourne Law School, and a consultant to various organisations, including Linklaters, the Australian Law Reform Commission and the World Bank.