Impact case study database

There are over 30 million credit cards in the UK. Card providers require consumers to make at least the minimum payment on their credit cards, typically 1% of the balance plus fees. The minimum payment is intended to protect the small group of consumers, who would otherwise make no repayment, from the effects of compounding interest. Stewart’s research, however, has provided compelling evidence that minimum payment information has unintended and negative consequences on consumers’ repayment behaviour, that fees have no effect at all in helping people to remember to pay their credit card debt, and that many consumers adopt ‘auto-paying’ the minimum payment by direct debit which is not always a sign of financial distress. One in four credit card payments are only at or just above the minimum amount, leading to further interest payments and potential future risk of financial difficulty. Stewart’s research into consumer decision making has fundamentally shaped the UK’s policies on credit card repayment in a number of ways. Dr Stefan Hunt, the Head of Behavioural Economics and Data Science at the FCA, states that Stewart’s work has “ directly and substantially impacted a number of very important parts of the FCA’s policy formation”.

Shifting the FCA’s understanding of consumer behaviour

In April 2014, the FCA became responsible for regulating consumer credit. The FCA raised the concern that some consumers repeatedly make minimum payments, which over a long time may have wider harmful implications, and at this time they considered minimum repayments a weak indicator of problem credit card debt. The FCA launched a Credit Card Market Study in November 2014 [5.1] to assess whether the credit card market for retail consumers was working in the interests of consumers, in particular, to understand why consumers repay only the minimum, acknowledging as motivation Stewart’s published research on anchoring [3.1].

Published in November 2015, the FCA’s Credit card market study interim report cited Stewart’s anchoring effect of minimum repayments. The FCA expressed concern that consumers with systematic minimum payment behaviour (nine or more minimum repayments, while also incurring interest charges) or consumers using a large fraction of their credit limit are profitable to card providers and that firms “ have fewer incentives to address this” [5.2]. The interim report found that 5.2% (1.6 million people) are repeatedly making minimum payments while incurring interest across all credit risk groups and demographic segments. The FCA was concerned that there is “ some risk that this debt becomes problematic in the future”. The interim findings proposed, as directly suggested by Stewart, removal of the minimum repayment amount. In early 2016, the FCA consulted with industry and consumer group stakeholders and carried out behavioural trials to ensure that the proposed changes were effective.

Following the interim report, Stewart and collaborators presented their research findings to the FCA in December 2015 and submitted the report 'Consumer behaviour in the UK Credit Card Market - Insights from Consumer Credit Data Provided by Argus' in January 2016 [3.6]. This report provided the FCA with crucial independent evidence on consumer switching, delinquency from initial missed payments, minimum repayment, and multi-card behaviours and was key to informing their understanding of consumer behaviour, particularly that systemic minimum repayment behaviour does not always indicate that consumers are in financial distress and is often a result of passive ‘auto-pay’ behaviour. Stewart’s research contributed to a significant shift in FCA thinking, from understanding systematic minimum payment as a symptom of, for the majority of people, inattention rather than financial difficulty.

Influencing the FCA’s guidance to the UK banking industry and consumers

The FCA’s credit card market study final findings report (MS 14/6.3) was published in July 2016. Further analysis by the FCA had found that persistent debt or systematic minimum repayment behaviour persists over several years, increasing their concern about potentially problematic credit card debt and passive behaviour using minimum repayments [5.3]. The FCA stated that they “ believe there is already considerable academic evidence to suggest that changes to disclosures and repayment options, in particular removing references to the minimum repayment amount, could have a significant impact on consumers’ decisions when repaying their credit cards,” as proposed by Stewart .

In 2017, the FCA consulted with the credit card industry on new rules to address persistent credit card debt and earlier intervention remedies. The consultation included a remedy to enable consumers to repay more quickly by changing the repayment options. The FCA introduced the new rules on persistent credit card debt and earlier intervention remedies in February 2018. To address the problem of inattention as identified by Stewart, card providers must now encourage consumers to repay more with nudges at 18 and 27 months. They must also encourage consumers to take stronger action to clear the debt in 3-4 years including converting the debt to a personal loan and, if consumers cannot afford to repay, forbearance. The total cost savings to customers is estimated to be between £310 million (GBP310,000,000) and £1.3 billion (GBP1,300,000,000) per year, impacting consumers, card firms, trade bodies and consumer groups [5.4]. The FCA reminded card firms in February 2020 of their responsibilities to consumers in persistent credit card debt. In addition, the FCA provided guidance for consumers outlining the real cost of making minimum repayments [5.5].

Shaping the FCA’s investigation into policy interventions

Stewart’s research actively shaped the programme of field trials of policy interventions run by the FCA during 2017-18. The design of these trials was inspired by Stewart’s hypothetical credit card repayment task and Stewart was involved at all stages of the work from design to publication. The programme of trials demonstrated that consumers do change their repayment behaviour when minimum payments are concealed, but also that observing large proximal changes in behaviour may overestimate the longer-term effect of policy interventions. For example, in collaboration with Professor David Laibson (Professor of Economics, Department of Economics, Harvard University), two retail banks, and the FCA team, Stewart ran a large field experiment testing the effect of shrouding the option to set up a direct debit at the level of the minimum payment. When the minimum payment option was shrouded, a large fraction of users instead set a fixed sum direct debit. But there was no distal effect on overall debt levels one year from the intervention—a vital discovery which ruled out the intervention as a policy remedy. Stewart co-authored four papers with the FCA team describing this work. In these papers the findings about shrouding the minimum on monthly bills were replicated and extended. The papers were published in 2018 in the FCA’s Occasional Paper series [5.6-5.9]. The FCA Occasional Papers inform its views and also its stakeholders including the credit card industry, practitioners and policymakers, and academic communities.

Changing the FCA’s guidance on providing minimum repayment information

As a consequence of the findings, the FCA are considering a consultation on changing the FCA’s rules and guidance to mandate the removal of the minimum repayment anchor [5.10], though the possible announcement has been delayed by COVID-19.

In sum, Warwick research played a key role in providing independent evidence to inform the FCA’s understanding on consumer behaviour, to test intervention strategies, and to identify potential consequences of any future policy action. Dr Stefan Hunt, Head of Behavioural Economics and Data Science at the FCA, stated Stewart’s research “ has shaped the FCA’s thinking on consumer detriment in the credit card market and design of potential remedies.” [5.11].

Dr Wade’s research has increased awareness amongst arbitration professionals of the malleability of witness memory, underpinned policy and practice and informed professional training.

Governments and multinational companies use international arbitration to resolve high-stakes commercial disputes. The International Chamber of Commerce (ICC), International Court of Arbitration (hereafter, the Court)—established in Paris, 1923—is the gold standard in arbitral institutions and oversees more than 45 million companies in 100+ countries. In 2018 alone, the Court administered 842 cases involving 2,282 parties from 135 countries, with $45 million (USD45,000,000) on average in dispute. The Court has a Commission of over 1000 senior arbitration experts which creates policy that governs all aspects of the arbitral process. Legal counsel and arbitrators from around the world look to the Commission for guidelines and best practice.

In 2015, the Commission established an international Task Force of 152 arbitration experts. Wade was invited to be the first, and only, scientific advisor appointed to the Commission [5.1]. She joined four senior arbitral experts based in the US, France, Germany and the UK, to steer the Task Force, whose mandate was to consider the practices used in international arbitration and to determine how best to maximise the reliability of witness evidence. The ICC Commission Chair and Secretary stated: “The need to look at the psychological aspects and impact of memory on witness evidence was crucial to be able to understand the accuracy of witness evidence in the arbitral process and the interdisciplinary nature of the work of this Task Force, which would not have been possible without the research and contribution of Dr Wade…” [5.2].

International arbitration proceedings frequently hinge on witness evidence, and the time, effort and cost dedicated to collecting and preparing witness testimony are considered justified because they assist tribunals in reaching just decisions [5.2]. Yet that justification is brought into question if the witness evidence is unreliable. Despite the vital role of witness evidence in international arbitration, there were no formal guidelines about who may serve as a witness, and how witness evidence should be prepared, presented and evaluated. Through regular discussions with the Task Force, Wade determined that arbitration practitioners frequently prepared and presented witness evidence using techniques that could corrupt evidence and undermine the fairness of the arbitral process.

From January 2017, Wade regularly presented to the Task Force and wider Commission, to both in-person and remote audiences of upwards 150 arbitral experts. During the inaugural Task Force meeting (Paris, February 2017), Wade explained the application of scientific research to legal settings, including high-stakes commercial disputes and the science demonstrating the malleability of witness memory [5.3]. Wade has also attended regular meetings with the Task Force steering group and directly influenced the group’s strategic approach to affecting change within the arbitration community [5.2, 5.3]. The task force management group affirms that Dr Wade’s “contribution to the Task Force cannot be overstated … Without Dr. Wade's research work, knowledge, and relentless dedication, the project would not have been possible” [5.3].

In 2018, Wade co-authored a scientific review paper with Dr Ula Cartwright-Finch, a member of the task force steering group and an international arbitration lawyer based in London [Appendix 1 of 5.4]. This review was written specifically for arbitration experts and described the relevance of Wade’s research to witness evidence in international arbitration proceedings. The review discussed how suggestive interviewing techniques foster false memories, the co-witness suggestibility effect, and the consequences of false memories . The review also outlined key areas in which eyewitness research is conflicting or sparse and cannot yet inform legal practice. For instance, Wade informed the Commission that research on cross-examination style questions and their impact on human memory was relatively weak, which led the Task Force to refrain from making new recommendations with respect to cross-examination in international arbitration [5.5].

Through ongoing discussions with the Commission, Wade also discovered that many arbitration professionals were sceptical about the generalizability of witness research to civil law contexts. Practitioners claimed they would be unwilling to change their practice without some compelling demonstration that the procedures they currently use for preparing and presenting witness evidence were corrupting that evidence. This led Wade to design and execute (independent) applied research at the University of Warwick that clearly demonstrated the extent to which witnesses in arbitration proceedings were prone to providing erroneous testimony. She tested over 300 professionals working across a range of industries and in a wide range of roles, from skilled labourers, senior managers, to CEOs. The results showed that witness memory in international arbitration is subject to the same distorting effects that research has proven exists in other domains. Suggestive interviewing techniques (e.g., asking leading questions, exposure to misinformation), witnesses’ personal beliefs and biases (e.g., loyalty to one’s employer), and misleading evidence can distort witness testimony in commercial disputes. This research is published in the Task Force's final report [5.4] and was presented to more than 1000 arbitration professionals at the 2018 annual Commission conference [5.6]. The work stimulated further witness research in civil law contexts, thereby strengthening and extending the evidence base for informing future guidelines for arbitration professionals.

In her role as scientific advisor to the Commission, Wade co-produced the International Chamber of Commerce’s evidence-based guidelines on maximizing the probative value of witness evidence in international arbitration. The guidelines were published as part of the Task Force's final report in April 2020 [Section 4 in 5.4] and Wade’s research played a key role in guiding the remit of the report. Most importantly, the report described multiple measures that arbitration practitioners should adopt to enhance the reliability of witness evidence. For example, the guidelines state that an arbitral tribunal should " give instructions to the witness prior to his/her examination at the hearing by alerting the witness about the importance of distinguishing between personal knowledge and information gained post-event from secondary sources." [5.4]. These recommendations were guided by Wade’s own research and the scientific review written by Wade and Cartwright-Finch. Highlighting Wade's key role, the Task Force co-chairs state, " The Task Force benefitted from the expertise of Dr Kimberley Wade at the University of Warwick, who undertook a series of field studies designed to determine the vulnerability of memory in the context of a commercial dispute not atypical of the disputes that are routinely resolved in arbitration” and that they are “ deeply grateful to Wade for her insights in support of the Task Force”. [5.4].

Wade’s research on the malleability of witness memory is frequently used to train arbitration professionals and has influenced how practitioners view and obtain witness evidence. Ula Cartwright-Finch, the Managing Director of Cortex Capital, a London-based training firm for the law and financial services sectors, has used Wade’s research to deliver training and advice to more than 900 members of the international legal community, including in-house legal teams, arbitration judges, and arbitration lawyers at all levels of seniority. Cartwright-Finch confirms: “ Both in pitches and in the training sessions I deliver on interviewing skills, I refer to Dr Wade’s studies to demonstrate the applicability of memory research and to underline the importance of handling witness evidence according to the principles discussed in the Task Force Report.” Cartwright-Finch adds: “… I know that lawyers are shifting the way they conduct interviews and making other strategic decisions in their cases as a result of this research, including Dr Wade’s original study with the Task Force.” [5.7]

Professor Wolke and colleagues’ cumulative research into babies born preterm or sick has had an impact on a large number of beneficiaries: policymakers, commissioners, healthcare professionals, education and social care services, parents and carers for children and young people born preterm, in the following ways:

Impact on European standards of care for follow-up of children or young people born preterm

Based on the politically identified need to achieve common standards of care and national guidelines across more than 30 countries, between 2013 and 2018 the European Foundation of the Care of Newborns and Infants (EFCNI) developed 96 standards of care [5.1], of which 15 were concerned with follow-up and continuing care. Wolke chaired the international expert committee and edited these 15 standards. The chair of EFCNI confirms that “ Professor Wolke's research was instrumental in informing the Follow-up and Continuing Care standards. Several of his research publications, for example ‘Universal gestational age effects on cognitive and basic mathematic processing’, helped inform guidelines on cognitive development of infants born very preterm or those infants with risk factors.” [5.2].

Wolke presented the standards to MEPs and interest groups at the European Parliament in Brussels in November 2018, highlighting the need for common standards of follow-up care across the member states, with approx. 650,000 preterm births per year. The standards have been endorsed by 120 healthcare professional societies and 51 parent organisations who support the call for action to implement them across Europe [5.1].

National and international adoption of PARCA-R as a screening tool for neonatal care in child development clinics

Professional guidelines in the UK: Since 2017 the PARCA-R has been recommended by NICE in its guidelines, Developmental follow-up of children and young people born preterm, to screen for cognitive and language problems in the follow-up of very preterm children at 2 years (affecting 7,000 very preterm children per year in the UK) [5.3].

International professional guidelines: EFCNI in one of its standards on ‘motor and neurological follow-up assessment’ recommends that healthcare professionals should “start a service that uses parent reports using screening questionnaires - Ages and Stages Questionnaire or PARCA-R” [5.1]. PARCA-R is the recommended patient outcome measure at 2 years in the Standard Set for Preterm and Hospitalised Newborn Health by the International Consortium of Health Outcomes Measurement (ICHOM), launched in August 2020 [5.4] (potentially 15 million newborns per year).

During the COVID-19 pandemic: The British Association of Neonatal Neurodevelopmental Follow Up recommended the use of PARCA-R for two years’ review in their March 2020 guidance for telephone–video clinics [5.5]. The Swiss Society of Neonatology (SwissNeoNet), which hosts the official medical quality register for Switzerland’s neonatal intensive care (level IIB) units and neonatal intermediate care (level III) units, also adopted the PARCA-R in 2020, when strict restrictions prevented face-to-face contact, to undertake routine follow-up assessments at 24 months of children born very preterm or who have suffered from neonatal hypoxic ischaemic encephalopathy (approx. 1,000 per year). The Co-ordinator of SwissNeoNet said: “[PARCA-R] has given perinatal centres and paediatric units the capacity to continue delivering their services remotely and, more importantly, ensuring that infant patient needs continue to be met.” [5.6a]. In addition, in April 2020, the National Maternity Hospital, Dublin, started using the PARCA-R in place of their key follow-up tool - the Bayley Scale, with at least 120 children benefitting from the PARCA-R assessments [5.6b].

Practitioners and parents: Since its standardisation (age-and sex-adjusted) in 2019, PARCA-R has been the preferred tool for cognitive screening of children at all gestations (630,000 per year in England and Wales) by healthcare professionals and parents. In December that year, the PARCA-R Technical and Interpretive Manual, describing the development and standardisation of the test and providing the norms tables needed to score the questionnaire by hand, was sent to all (204) neonatal units in the UK, reaching around 5,000 neonatal nurses, to support the test’s use in clinical practice. Its non-standardised version is available in 14 languages and since May 2018 has been accessed by more than 1,200 users, mainly professionals and parents (71%), in 67 countries. [5.7]

PARCA-R is free to download and can be completed by parents in around 15 minutes, compared to 2 hours for the resource-intense standard developmental or IQ testing. As an example, PARCA-R was instrumental in Glasgow’s Royal Hospital for Children (RHC)’s redesign of its neurodevelopment outpatient service in 2017. Before NICE guidance RHC had not used a standardised assessment at two years corrected age; for the last three years, 53 (100%) of families attending the clinic at two years corrected have completed a PARCA-R questionnaire [5.8]. The consultant neonatologist states that, “ Many children do not demonstrate their full potential within the outpatient clinic setting, particularly with language and cognition. The PARCA-R overcame this challenge while integrating families into the assessment process. Our families engaged well with the questionnaire, with every family completing the questionnaire in the first 2 years of its introduction.” [5.8].

Improved awareness and measurement of outcomes by healthcare and educational professionals

National guidelines: Informed by Wolke’s research, the NICE guidelines (2017) on the special needs of preterm children and lack of knowledge and training of teachers and educational psychologists recommended “ recording routine educational measures at key stage 2 (including special educational needs and disability) on an operational delivery network-wide basis, to allow educational outcomes at 11 years to be linked to neonatal information.” Healthcare professionals are also recommended to provide information about the risk and prevalence of developmental problems and disorders in babies born preterm to parents and carers, and offer to discuss this with them [5.3]. Wolke’s research informed the Swedish Neonatal Society’s guidelines for the follow-up of neonatal risk babies (2015), highlighting the prevalence of extremely premature babies that need extra support at school age [5.9].

Other guidelines for practitioners, parents and carers: Local authorities e.g. Hampshire County Council and NHS Hampshire Hospitals, drew on Wolke’s research to increase parents’, carers’ and teachers’ understanding of how premature children are affected in their development and learning [5.10]. Neonatal societies e.g. Royal College of Occupational Therapists, used his work in practice guidelines (2017) to raise awareness for occupational therapists about how preterm children remain at high risk for neurodevelopmental disability compared with term peers [5.11].

Department for Education (DfE) guidelines: DfE’s Advice on the admission of summer born children for local authorities and school admission authorities and parents (July 2013, revised September 2020 as Summer Born Children Starting School: Advice for parents) used Wolke's research as part of the evidence base to "…take account of the age group the child would have fallen into if born on time." [5.12a; 5.12b]. This guidance from DfE details the framework that UK school authorities must operate under and takes account of the needs of 12,000 parents of preterm children per year who are able to request a delayed enrolment date (around 15% of all requests) [5.12c].