Financial Services Research Forum


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Financial Services Research Forum

  1. 1. Financial Services Research Forum June 2002 A Review of Groups with an Interest in Consumer Financial Education in the UK F. Noble and D. Knights For the Education/Stakeholder Project
  2. 2. Financial Services Research Forum - Consumer Financial Education in the UK – F. Noble & D. Knights - June 2002 A Review of Groups with an Interest in Consumer Financial Education in the UK Introduction This report was commissioned by the Education Theme Advisory Group of the Financial Services Research Forum, as a contribution to the development of consumer education in personal finance in the UK. The Forum has long regarded personal financial education as beneficial both to consumers themselves and to the long-term interests of the industry, since educated consumers will actively seek to buy rather than reluctantly be sold financial products. It has already funded several research projects on the topic. Recently, the Forum has focused on financial education for adults, especially in the workplace, and on the role of education in encouraging people to save more for their retirement. These interests are to some extent reflected in this document. Noting the diversity of groups currently involved in personal financial education, and recent calls for strategy and coordination of this activity at the national level, the Advisory Group wished to make a contribution to the latter with a review or audit of the major groups involved. We have attempted to include here the main voluntary, government and industry bodies we are aware of which are active in or have an interest in financial education for consumers. A number of groups have multiple roles, such as lobbying, providing information and/or education, and carrying out research. Some while not having an explicitly educational purpose do work to inform consumers on particular issues and have a potentially important role in consumers’ self-education. The report indicates, we think, the variety and range of activity in the area of personal finance education in the UK today, with many groups operating at different levels of financial sophistication, addressing different audiences in different ways. Because the field is extremely dynamic, inevitably some of this information will go out of date very quickly. We therefore invite representatives of the organisations mentioned, and those who feel they should have been included but were not, to send additions and corrections by email to the address below. We hope that, alongside the FSA Adult Financial Capability Framework working group activity, this review will be a resource for the organisations themselves and all those interested in personal financial education for consumers, informing them who is doing what, and enabling them to learn from each other and coordinate their efforts. Please address comments to: 2
  3. 3. Financial Services Research Forum - Consumer Financial Education in the UK – F. Noble & D. Knights - June 2002 Voluntary sector Age Concern Age Concern England Astral House 1268 London Road London SW16 4ER Tel: 020 8765 7200 Gordon Lishman, Director General Conducts research, campaigns, has been training older people in skills to take part in debates and consultations so that their voice will be heard. Campaigned for rise in basic state pension, compensation for widow/ers under SERPS change of rules, state-paid personal care for elderly. Total expenditure y/e 31 March 2001 £22.5 million. Information and short courses for older people, their carers and families, professionals; library resources. Information line handled 240,000 queries y/e 31 March 2001. Factsheets, handbooks on pensions, retirement, taxes and savings. Handbooks include: Pensions Handbook: Planning ahead to boost retirement income, by Sue Ward (Sept. 2001)– a guide for people in mid-life Retirement Handbook (Jan. 2000) includes a section on Managing your money Your Rights 2001-2002: A guide to money benefits for older people (updated annually). Help the Aged Information Dept. Head Office 020 7278 1114 Financial leaflets, website, helpline: ‘SeniorLine is a free national advice and information service run by Help the Aged for older people, their relatives, carers and friends’. Produces free information material for older people on money matters, housing, home safety, health, including: Thinking About Money (Nov. Attendance Allowance 2001) Welfare Benefits for Carers Questions on Pensions Bereavement Benefits Managing a Lump Sum Paying for Residential Care Equity Release Plans Pre-Paid Funeral Plans Individual Savings Accounts Claiming Disability Benefits Check Your Tax Benevolent Societies Council Tax 2001-2002 Can You Claim It? Advice on Welfare Benefits Will supply local groups and organisations, such as libraries, CABx, local voluntary organisations, hospital departments and day centres with stocks of free leaflets. 3
  4. 4. Financial Services Research Forum - Consumer Financial Education in the UK – F. Noble & D. Knights - June 2002 Age Concern and Help the Aged both suggested to the AdFLAG consultation that consideration must be given to getting information to older people where they are, such as clubs, doctor's surgeries and post offices. They noted that the increasing number of 'pensioners' forums' may be interested in financial literacy. They and other older people's organisations are developing peer training methods, which train older people to pass on skills to other older people. Citizens Advice Bureaux Nicola Simpson, Director of Policy and Public Affairs Myddelton House 115-123 Pentonville Road London N1 9LZ 020 7833 4371 Kate Taylor NACAB Midlands Region 1st floor Blenheim Court Huntingdon Court Nottingham NG1 3JJ 4
  5. 5. Constituency: general public. CABx have over 2000 outlets, including health settings, community centres, town halls and libraries. 87% of bureaux now offer specialist advice on money or debt, and 79% on benefits. There is a public information website – – and a 24 hour pre-recorded telephone helpline in 115 bureaux, which handled nearly 2 million calls in 2000/2001. The National Association of Citizens Advice Bureaux (NACAB) provides supports to the local bureaux including information systems, training, social policy, and publicity. Total funding in 2000-1 for local bureaux was £91 million, most coming from local authorities. NACAB received £22,640,000 from all sources but is mainly funded by the DTI. Among the public, there is very high awareness of the existence and role of CABx, and a high level of trust and belief in their independence. CABx contribute to financial literacy by: • Reading and explaining forms and letters to people who are illiterate. • Giving people access to information about their rights, responsibilities and choices found in a range of official documents • Providing advice across a wide range of financial matters. • Providing advice to groups of people including employees after large redundancies or during a strike, much of which involves generic financial advice. • Self-help debt packs. • Some CABx have actively worked in their communities to support the setting up of a credit union. (adapted from AdFLAG report) NACAB produced a report on financial literacy in Nov. 2001, Summing up: bridging the financial literacy divide. Based on evidence from more than 730 CABx, the report gave many examples of consumers’ confusion leading to their detriment in different areas of finance, including in dealing with the public sector. It also documents financial literacy initiatives undertaken by 60 local CABx,1 often in collaboration with other groups (e.g. housing associations, Basic Skills Agency, local authorities). Most are small-scale and the effort is mainly directed to schools and young people. NACAB has appointed an official at national level, Kate Taylor, to help co-ordinate these local educational efforts. It is also seeking to engage partners in promoting financial education nationally. The report concludes that as many more people are now involved in financial services than in the past, the task of financial education extends far beyond basic literacy and numeracy. It recommends that the Government sees that a 10-year national strategy for improving financial literacy is developed, bringing together all the various initiatives across sectors, covering all personal finance matters including social security benefits, tax, credit, savings, insurance and pensions. 1 This is in process of being updated (14.2.02).
  6. 6. Consumers’ Association 2 Marylebone Road London NW1 4DF Louise Hanson, Senior Public Affairs Officer, 0207 7707252 or Mick McAteer, 0207 770 7109 Constituency: general public. An independent consumer organisation with 700,000 members. Financial matters a major concern. Campaigns and lobbies Government (e.g. with-profits 2001), responds to consultations, conducts research, website, publishes Which? reports and books, e.g. Which? Way to Save and Invest The Which? Guide to Money (Sept. 2001) The Which? Guide to Insurance The Which? Guide to Shares The Which? Guide to Pensions Be Your Own Financial Adviser Recent articles include: ‘Escape to stakeholder: choosing and using stakeholder pensions’ (March 2001) ‘How to retire at 50’ (Oct. 2000) ‘Employers’ pensions’ (Aug. 1999) CA has no formal commitment to undertake financial education work on its own. It does support other groups which do such work, e.g.: • published a policy paper directed to the FSA in particular, ‘A new role for money education’ (Feb. 1999) which addresses a strategy for money education in the UK • participates in pfeg and FSA Consumer Education Forum and Pensions Education Forum • made work on Long-Term Care available to Age Concern • produced a multi-media resource ‘Confident Consumers’ for the DTI and Basic Skills Agency, which included basic financial skills. The CA has a consumer education post which is currently vacant. The CA is funded by its magazines and other publications, it receives no government funding or industry advertising. Its mission is to: • ‘Empower consumers to make informed decisions; and • Achieve measurable improvements in goods and services’ ‘For CA, the ultimate objective in the financial services sector is to ensure that consumers have access to quality products and services designed to meet their needs and wants not the commercial needs of financial institutions.’2 Views information, competition as means to achieving that objective, but regulation and advice are also necessary. • raising public awareness and providing information are not sufficient to overcome ‘barriers which prevent consumers participating fully and fairly in the financial services market place’ – especially in the case of more complex and long-term products • many core products are flawed • competition is not working in some key sectors especially life and pensions, so that the concept of choice is illusory. 2 CA Policy Paper ‘A new role for money education’, Feb. 1999.
  7. 7. The CA’s general view is that while basic skills and understanding, e.g. of budgeting, debit and credit, banking system, are important, when it comes to more complex products such as pensions, education will not remove the need for advice. Also, it will take a generation for public awareness and education initiatives to lead to real change, and meanwhile consumers will be at risk without regulation. The CA advocates making basic financial planning advice available, and regulation to make product choice simpler (e.g. CAT standards, league tables, safe haven products especially in those meeting ‘core welfare needs’ such as pensions, life, health and ltc insurance). The Consumer Policy Institute Prof. Geoffrey Woodroffe, Department of Law Brunel University Uxbridge, Middx UB8 3PH An independent institute was set up by the National Federation of Consumer Groups with other organisations in 2000, in order to inform public policy on consumer issues. It represents a partnership between business and consumer organisations in the public interest. Supporters include HSBC, Zurich Financial Services, Sainsbury, Whitbread and BT. The CPI commissions and undertakes research, publishes papers, and runs events [The Autumn lecture series (2001) was on the theme of Consumers and Corporations. The CPI is not public-facing and is not directly concerned with financial education; however, the presence of Marie Jennings MBE (founder of the Money Management Council) as Board Chairman makes it likely that both financial services and education will be part of the agenda. For example, the CPI recently commissioned and published a report, ‘Where next for financial advice?’, by Jane Vass. Credit Action Keith Tondeur 01223-324034 Publishes money management guides, training to employers’ welfare staff and employees, helpline. Mainly concerned with debt. Credit unions Shaun Spiers, Association of British Credit Unions (ABCUL) Holyoake House Hanover Street Manchester M60 0AS 0161 832 3694 In 2000, there were about 681 credit unions in the UK with 270,000 members. The movement is stronger in Scotland than elsewhere in the UK, and the largest and most successful are workplace-based. Credit unions were discussed at length in the Forum report on Personal Financial Education (March 2001, pp. 36-38, 72-73), and also received a good deal of attention in the AdFLAG report, since both recognised that:
  8. 8. • credit unions have a legal responsibility to provide ‘training and education of their members in the wise use of their money and in the management of their financial affairs' (Credit Unions Act 1979). • membership is of itself educational • volunteer staff and directors receive financial training • staff often work with members on a 1:1 basis, help them with money problems, debt • membership provides opportunities for financial education, at induction and afterwards, from a trusted source, at a point when people are receptive to it. PFE is already part of the programme of credit unions, although it is mostly on an informal basis. The main problems, as identified in the previous report, are that the credit union movement is as yet very small in the UK, and since credit unions are mainly staffed by volunteers the resources available for education are very limited. Extension of these activities to more formalised PFE demands resources which many credit unions lack. However, following the AdFLAG report, the Association of British Credit Unions (ABCUL) is working with the Basic Skills Agency and FSA to develop financial education training programmes. Money Management Council Kenneth Davy, Chairman DBS Management plc Independence House, Holly Bank Road Huddersfield West Yorkshire HD3 3HN 01484 422224 Constituency: adults, employees in the workplace. The MMC has been registered as an independent charity since 1985 to educate adults in better money management. Activities include attempts to raise consumer awareness directly through the media, factsheets and a website, and promoting the cause of PFE with Government and the industry. Examples are: • ‘Find out how to be clever with money’, quiz and personal examples in Good Housekeeping, Feb. 2001. • Participated in Mirror Money award scheme for best bank, insurer, IFA, pensions and mortgage provider.
  9. 9. • In the year 2000 with support from the FSA and Treasury, it piloted Money Clinics in the CAB in Cirencester (Public Understanding of Money Affairs project). These were staffed by IFAs on a voluntary basis, and aimed at helping individuals with advice by taking up where CAB money advisors necessarily left off. The activity was supported by talks to local groups. NACAB is currently examining the possibilities for this idea to be developed. The take- up was extremely limited, demonstrating that there is considerable public apathy and indifference to independent learning about financial matters. • A Quality Mark was launched at the Bank of England 1997. This free voluntary service was designed for organisations providing generic financial information to the public, for literature that meets high standards of expertise and impartiality. The idea has been taken up by the FSA and ABI’s SALTR activity but needs wider recognition. • The MMC website [] has news about MMC activities, a list of factsheets available, and links to money advice and financial information site. • An important aspect of the Money Management Council’s work in the past was to provide tutors for pre-retirement and redundancy courses, but this is no longer a core activity partly because of falling demand but also due to limited resources for publicising the service. The MMC’s mission is ‘to be the catalyst and driving force for the provision of consumer education on money matters’. Two of its most successful activities have been to lobby government and the industry behind the scenes for better consumer education and information, and its range of consumer fact sheets. • MMC lobbying contributed to the inclusion of consumer education as one of the FSA’s statutory objectives. • The fourteen free fact-sheets (examples ‘Planning your finances before you retire’ and ‘Where can I get financial advice?’) are clear and informative. The content is basic and jargon-free, and generally applies to people of all social backgrounds and financial means. Distribution is to individuals usually in response to articles in the press, and bulk orders to help/advice agencies, pre- retirement courses, companies and trade unions. The MMC has a continuing interest in providing materials for financial education in the workplace. The MMC had hopes of becoming the independent lead body for industry-supported consumer education. The MMC view is that the industry did not seize this opportunity to improve its practice and reputation, and although it has been influential the MMC’s ambitious programme has suffered from lack of resources. It was reorganised in 2001.
  10. 10. National Consumer Council Martin Coppack, Policy Officer 20 Grosvenor Gardens London SW1W 0DM 020 7881 3049 The NCC ‘works to represent consumer interests to policy-makers, regulators and suppliers’. It is both a policy think-tank and a campaigning organisation. Its campaigns for change include promoting consumer education and information. Accordingly, one of its objectives in 2000/01 was to: ‘Create smart, streetwise, skilled consumers ... by promoting access to high quality education, information and advice’. It has 42 staff and is largely funded by grant-in-aid from the Department of Trade and Industry (DTI), £1.9 million in 2000/01, and supplementary funding from the DTI for a range of other projects. The NCC raised a further £160,000 from other sources. Consumer education work includes: • working with the Financial Services Authority to contribute to a teaching resource on Ethical Consumerism for Key Stage 4. The materials, to be published by the Qualifications and Curriculum Authority, are intended to provide a starting point for schools as they develop their citizenship provision • a lead role with the National Consumer Education Partnership (see below) • working with the Institute for Citizenship to produce practical resources for teaching consumer skills through the new national curriculum subject of Citizenship • grant from the Adult and Community Learning Fund for a project to help empower young people to become involved in the governance and delivery of their own Connexions Service. National Consumer Education Partnership NCEP was set up in 1998 by the NCC with ten other consumer and consumer education groups including the Consumers’ Association and National Federation of Consumer Groups, to promote a national strategy for consumer skills education in schools, and among adults in the workplace and community, and to put consumer skills onto the national agenda. To this end, NCEP developed a generic Framework of Consumer Skills with a number of entry points for different life stages, to be used by all involved in consumer education. It will be followed by a framework adapted to the school curriculum and one showing how the generic framework might be delivered to adults. While the framework is not specifically addressed to personal financial education, most of it is relevant to financial services as well as goods and products. It was placed on the table for input into the FSA Adult Financial Literacy Framework Working Group.
  11. 11. The National Institute of Adult Continuing Education (contributed by Annette Leach) Annette Leach Research and Development Coordinator 21 De Montfort Street Leicester LE1 7GE Tel: 0116 204 4200 Fax: 0116 285 4514 Email: NIACE is a national organisation representing the interests of everyone concerned with adult learning, regardless of level and sector. It is a registered charity and a company limited by guarantee. NIACE is a membership organisation, with individual members and more that 440 corporate members across the full range of providers, policy makers and users of adult learning opportunities. Its broad aim is to advance the interests of adult learners and potential learners and its work gives priority to measures to secure more and different adult learners. NIACE undertakes a wide range of project work across all sectors and for many clients. Recent projects include research, development work, consultancy, project management and advocacy work of different kinds. We have undertaken large-scale national quantitative surveys, and qualitative studies, as well as case studies of good practice. We publish our work and organise a conference programme through which we disseminate our findings. NIACE’s concern with financial literacy is connected with three interests: • securing more and different adult learners in order to widen participation and improve learning opportunities for all adults • promoting learning among older people • helping adults to improve their literacy, numeracy and spoken English in a practical and relevant context. NIACE has been involved in two research projects in the area of financial literacy and older people. The first, for the DfES with the Basic Skills Agency, Pre-Retirement Association and Help the Aged, has been researching the skills older people need and use to manage and understand money, savings, debt, paying for services and other such issues in their later life. The second, for Halifax Bank plc, and with the same partners, has been examining the relationship between older people and those who provide financial services for them and the role of those in education to help sustain local relationships between the parties. Key products from the two projects will include • research reports • online financial literacy and older people materials • information on life stages and the issues faced in later life • guidance, for older people on issues and where to turn
  12. 12. • online group or individual questionnaires for local use • articles in NIACE’s journal, Adults Learning • fact sheets for practitioners • and information for pre-retirement providers. NIACE will be undertaking a project for Prudential Assurance Company Ltd to build and maintain an on-line financial literacy resource, aimed at families aged between 25 and 50 with a special emphasis on women members and distributed through a range of adult learning providers. Adult Educational providers, such as UK on-line centres, adult education services and voluntary and community bodies will be selected as partners in piloting and implementing the resource because of their ability to offer services to an identified target group of adults. NIACE’s International Women’s Day Conference 2002 focused on how learning can help older women, with financial literacy as one strand and one of the themes for Adult Learners’ Week 2002 was Financial Literacy and Older People. Personal Finance Education Group (pfeg) Wendy van den Hende, CE, 020 7220 1735 “The Personal Finance Education Group is an impartial, non-profit-making organisation which aims to educate all those at school about financial matters so that they are able to make independent and informed decisions about their personal finances and long-term security. The PFEG is a coalition of financial service industry representatives, regulators, consumer representatives, Government officials and educationalists.” This group, which has been in operation since late 1996, aims to help teachers develop financial capability in young people. Its website is central to this activity - together with case studies and a discussion forum for teachers, it contains a directory which lists resources graded by key stage and age from a large number of organisations []. It launched in 2000 a Quality Mark for such resources, to ensure that they are balanced, educational and do not promote branded products. Pfeg became a charity and company limited by guarantee in 2000. Its expenditure in the y/e 31 March 2001 was £244,697. Pfeg is funded by the FSA, DfES, Inland Revenue, and by 13 industry organisations. On the Board are representatives of AITC, ABI, NatWest, BBA, CA, ProShare, Building Societies Association, AUTIF, and FSA in an advisory capacity. In Nov. 2001, pfeg launched its ‘Excellence and Access’ initiative to help teachers become more confident and skilled in teaching personal finance. Initially, this 4-year project will take place in 400 secondary
  13. 13. schools, with the aim of developing a critical mass of expertise and good practice. The 40 LEAs involved will provide teacher training, followed by support from 17 pfeg advisers working with teachers within schools. An independent evaluation will be carried out by Brunel University. From autumn 2003 the results and lessons learned will be disseminated nationally. This programme which will cost nearly £2 million over 4 years is funded by AITC, Barclays, HSBC, and Prudential, and has the support of the DfES, FSA, and the Qualifications and Curriculum Authority. ‘Excellence and Access’ is intended to support schools throughout the curriculum (maths, ICT etc.) but is seen as having particular relevance to the programme on Citizenship, which becomes a statutory part of PSHE (personal, social and health education) secondary school curriculum in August 2002. Within this context, children 11-16 will be taught how the economy works, what influences how we spend and save, financial decision-making, our rights and responsibilities as consumers, employers, and citizens. Financial capability was introduced to the curriculum within PSHE at Key Stages 1-4 in September 2000. FSA research has shown a level of awareness of 37% in schools and that teachers think it is important. However, this part of the curriculum is not obligatory on schools, and take-up so far is reportedly disappointing. There has been more support for the financial capability initiative in Scotland because of the support of the Royal Bank of Scotland. The Pre-Retirement Association Mary Davies Pre-RetirementAssociation 9 Chesham Road, Guildford, GU1 3LS. 01483 301170 The PRA is an educational charity concerned with retirement planning generally; as such, education for financial planning and pensions is an important aspect of its work. It has both a corporate and a professional membership and works with employers, groups and individuals. It runs mid-life and pre-retirement courses which include a financial planning element. It trains professionals, awards postgraduate qualifications, and provides professional development for tutors, trainers, and HR managers on retirement issues. The PRA produces booklets on retirement for individuals, employers and tutors. Examples: Your Retirement (updated annually) Lump Sum Video Pack (case studies, with tutor notes) Understanding Occupational Pension Schemes In 2000, the PRA Financial Education Project published focus group research which it had commissioned on employees’ attitudes to
  14. 14. pensions and their companies’ pension communications.3 This was motivated by a concern that even in companies with good occupational pensions schemes, some employees were not joining and many seemed unaware of the benefits or how the scheme worked. The findings formed the basis for a framework for good practice by companies, and ideas for an effective communication strategy. The research also identified a need for general financial education to provide a context for retirement planning. Learning objectives were drawn up, and a programme developed and piloted in some of the member companies. This programme was launched February 15, 2002, and consists of eight modules in workbook form. Interactive Web and CD-Rom versions are in process of development. The PRA are interested in innovative ways of communicating with employees, including road shows, video presentations (plus live person), computer based modules, and an Intranet site which employees could access. In 2001 the PRA piloted a short course for independent financial advisers who provide the financial planning element on mid-life and pre-retirement planning courses, in order to improve the way they work with their potential clients, who come from a more diverse range of backgrounds than advisers themselves. It is hoped that this will become an accreditation scheme for advisers, and an industry-wide standard. ProShare Centurion House, 24 Monument St., London EC3R 8AQ 020 7220 1730 Diane Hay, Chief Executive ProShare is an independent, not-for-profit organisation, which develops and disseminates teaching materials for schools, publishes information for private investors, information about and encourages employee share ownership plans, helps set up and supports investment clubs, represents the private investor with Government, industry bodies and media. It has an increasing emphasis on education on investment for young people and adults. In 2000/1 total expenditure was £1,985,000. ProShare has many sponsors from financial services and other companies. ProShare has done work in schools for 10 years, providing resources for a personal finance programme for children 11+ on the website ‘Your Money Be Wise’ .com. It runs a Student Investor programme for 15-18 year olds, which provides education in enterprise and business finance. It runs Stock Exchange competitions at junior and senior 3 PRA Financial Education Project, ‘A report from the Pre-Retirement Association’, November 2000.
  15. 15. levels, in which pupils learn about diversification and risk. 4000 teams are involved in the senior competition this year. It has helped set up over 12,000 investment clubs in the UK, 60% of whose members had never invested before, and encourages employers to set them up. These are educational, as well as practical and confidence-building. ProShare has a long-standing interest in workplace financial education, and has placed it on the agenda of the FSA Consumer Education Forum (see below). It runs an award scheme for companies’ communications with private investors, and employee share ownership awards including ‘best financial education programme for employees’. Having supported employee share ownership for many years, ProShare is currently very concerned that employers provide education for employees so that they will be aware of the importance of diversifying their investments. As the Enron collapse has shown, this can make all the difference to employees’ pensions, and will become especially critical as employee share ownership is expected to grow with the introduction of the Share Incentive Plan. ProShare would like to get funding for a pilot project to develop an employer pack on this issue. Trades Union Congress and Trade unions There are 6.8 million trade union members in the UK. The Trades Union Congress and individual trade unions have a long-standing tradition of member education, some with their own residential colleges, or in partnership with residential colleges, FE colleges, and the WEA. ‘The TUC delivers day release and short courses to some 30,000 union representatives annually. Individual union schemes reach many more…’ (Hillage) Trade unions have many advantages and opportunities to educate and inform members in financial matters. They are likely to promote awareness of pensions to members, are involved in occupational pensions negotiations and serve as pension scheme trustees, for which they provide training to stewards and members. The PFEE final report gave a number of other examples of financial education by trade unions. This is frequently directed to union officials and activists, who then become a resource for lay members who have queries or problems. This two-step process appears to be efficient, and to overcome barriers of motivation and trust. The TUC together with the DSS ran a successful pensions helpline for the general public in the summer of 1999. It has been highly committed to Stakeholder pensions, with its own Stakeholder scheme, for which it conducted a major communications initiative in 2001. The TUC website has a Pensions Advice area, which includes ‘Pension
  16. 16. power for you’, basic information on state, occupational, stakeholder and other pensions, and contact numbers for more information. The next phase of the Stakeholder Education project will look at some trade union Stakeholder schemes in detail. Trade unions are also involved with employers and Government in various tripartite workplace learning schemes, including Bargaining for Skills, Basic Skills, Union Learning Fund, Learning Representatives, and Learning Centres (details in PFEE final report). Initially, the focus of these is on basic skills but there would seem to be considerable potential to include financial education in any extension of these programmes.
  17. 17. Government Government policy regarding personal financial education for consumers should be seen in the context of broader aims to: • Promote learning and skills in order to make the country competitive, ensure a high rate of workforce participation and reduce the social security burden; • Widen participation in learning to non-traditional groups; • Reduce financial and social exclusion, thus a focus on - basic skills training for adults, - numeracy and literacy in schools and for adults, - encouraging saving, especially in disadvantaged communities; • Make individuals take more responsibility for their own financial welfare through paid work, saving, pensions, thus improving their standard of living and reducing the financial burden on government now and in future. A myriad of initiatives have been undertaken since 1997 to promote adult learning,4 including: Adult and Community Learning lifelong learning, includes libraries, Fund museums Basic Skills initiatives University for Industry Family Literacy and Numeracy IT Learning Centres Local Authority Adult The New Deal Education For 25 plus - help local authorities develop For 50 plus Lifelong Learning Development Work-based Learning for Adults Plans. National Skills Task Force Learning Partnerships – establish Skills Development Fund a single body in each local area to Workforce Development bring together all existing agencies involved in post-16 education. Investors in People Learndirect helpline Union Learning Fund National Grid for Learning – Individual Learning Accounts teacher development, school sector, Career Development Loans Small Firms Training Loans Some of these initiatives have a bearing on the provision of financial education for consumers. At the same time, other Government initiatives, for example the payment of benefits into bank accounts and the Saving Gateway, make consumer financial education all the more urgent. Financial Services Authority The FSA aims to promote the financial capability of consumers, ‘the knowledge, aptitude and skills base necessary to become questioning and informed consumers of financial services and to manage their finances effectively’, and to provide consumer information and advice. To the latter end, the FSA produces general information about 4 Hillage.
  18. 18. products and services including banking, insurance, mortgages, pensions, ISAs, collective investments, gilts, shares, and getting financial advice. These can be downloaded from the FSA website, and printed booklets on most of these topics can be ordered by telephone. The FSA was responsible for developing, testing and disseminating Stakeholder Pensions Decision Trees, which are available as a factsheet, in an online interactive version on the FSA website, or as a pdf file which can be downloaded. The FSA has also produced comparative tables on Unit Trust ISAs, personal and stakeholder pensions (59 products), investment bonds, savings and mortgage endowments. Connected with these is information about such topics as risk and return, financial strength, and the use of past performance data. The educational, as distinct from informational, activities of the FSA are as follows: Consumer Education Forum (chaired by Deborah Arnott and Christine Farnish) is an ‘ad hoc advisory policy group’ meeting four times a year, to advise and assist the FSA on its consumer education strategy, contribute to the development of the FSA’s own consumer education work, and provide a way of ‘facilitating, supporting and co-ordinating consumer education work with others’. Members are drawn, by invitation, from the following organisations: NCC, CA, MMC, NACAB, Money Advice Scotland, pfeg, ProShare, AITC, AUTIF, NFER, BBA, ABI. Pensions Education Forum (chaired by Deborah Arnott) This group replaced the Pensions Education Working Group (DSS). Representatives are from: DSS/DWP, Treasury, OPRA, AITC, OPAS, CA, AUTIF, Institute of Actuaries, National Association of Pension Funds, CBI, ABI, and TUC. It has a workplace education project. FSA Schools Work The FSA has run three Education Conferences for teachers, school managers and LEA advisers. The first was to show how personal finance can be used as a context for the development and teaching of Maths in primary school. The third was on financial capability for 16-19 year olds. The FSA supports teachers with resources through its website, and through: Mega Money (coin recognition, 5-11) Money Counts (financial capability within the context of maths, 5-11) Colossal Cards (non-cash forms of money, 10-14) Make the Most of it! (14-19, five modules covering risk, ethical investment, financial planning, e-commerce, and the impact of genetic testing on insurance)
  19. 19. Looking after the Penneys (14-19, three programmes produced by Channel 4 and with support from online materials on FSA website) The FSA has also supported the work of pfeg to get personal financial education into the national curriculum. The FSA website ( has resources for teachers, parents and adults and the DfES guidance for schools notes ‘Financial Capability through Personal Finance Education’. Learn Online (Alan Grant) The FSA website also has a link to ‘Learn Online’, which is aimed at adults – ‘anybody wanting to learn more about financial products and services’. Formerly known as the Adult Learning Programme (ALP), it focuses on ‘developing consumers’ skills in the context of personal finance’i. It employs interactive computer software, to be used both by individuals and groups (workplaces, community groups and colleges) for formal and informal learning and through the Internet. It is tied in with other learning initiatives such as the University for Industry (UfI)/learndirect and Lifelong Learning, and is designed to be based on national standards and learning objectives. It is modular and includes a facility for self- and third-party assessment. Learn Online currently is divided into three sections, Needs, Products and Buying. ‘Needs’ contains a financial planning questionnaire. ‘Products’ has information under the subheadings ‘borrowing’, ‘protecting’, ‘saving’, ‘investments’, ‘pensions’. ‘Buying’ discusses ‘information you can get before buying’ and ‘issues to think about’. Self-assessment is provided through the ‘checkpoints’ where you can test your knowledge and understanding before or after going through the modules. (For more details, see the FSA website and Appendix 1 to the Financial Services Research Forum, Personal Financial Education in Employment Project Final Report, 6 March 2001.) Also on the FSA Consumer webpage is a link to a separate module on Financial Planning. All of this material is text-based, and requires quite a high level of literacy. Although the original intention was that this programme would have something for ‘inexperienced’ consumers as well, the FSA now sees it as appropriate for ‘more confident and knowledgeable’ consumers. It was partly because of this recognition that the FSA developed the Adult Financial Capability Framework. Adult Financial Capability Framework Working Group (chaired by Gill Hind) The Adult Financial Literacy Group (under the chairmanship of Derek Wanless) recommended that the FSA together with the Basic Skills Agency take the lead in co-ordinating activities in consumer financial education, especially for the financially excluded. This year the FSA
  20. 20. developed a framework for adult financial literacy with the help of a working group of interested parties, including eleven Government and sixteen non-governmental organisations which either sent a representative to meetings or otherwise expressed an interest. The framework aims to set out the skills, knowledge and understanding adults (16+, post-statutory education) should have about financial matters at all levels up to but not including the more sophisticated. It is supposed ‘to bridge the gap between personal finance education which is taught within the school curriculum’ and the FSA adult learning programme ‘Learn Online’. There is however a particular focus on ‘vulnerable and inexperienced’ consumers, and on relating financial skills and understanding to the national standards for literacy and numeracy, so that those involved in teaching basic skills can see how financial literacy needs can be addressed within their curriculum and so that those involved in financial capability education (including money advisers, teachers, trainers and helpers) can see the level of basic skills (e.g. doing percetanges, reading a leaflet and filling in a form) required to take various financial decisions. The resulting framework is seen as a provisional document, to be piloted and tested by groups involved in basic skills and financial literacy education, and will be revised next year in the light of their experience. Similarly to the national curriculum Guidance for Schools5, on which it is to some extent based, the framework is organised around levels of capability, and distinctions between knowledge/understanding, skills, and responsibility. It starts from an extremely basic level; e.g. 1. Recognise notes and coins and understand the differences in value. 2. Recognise there are different forms of money, eg, cheques, plastic cards, coupons, vouchers. to the far more complex: 1. Understand the principles of probability and insurance in complex situations, identifying potential risks and how to protect against them. 2. Understand the difference in risk and return between saving and investment products. 3. Know about the different sources of advice and the differences between generic and personal advice. 4. Be able to assess and compare different sources of financial advice and information. The capabilities are abstract and tend not to be product related, but illustrations are given in each case of how they might be contextualised for teaching purposes. While there is a suggestion that individuals might use the framework to improve their own understanding and skills, it seems unlikely that many would know how to do so. 5 DfES Personal, Health and Social Education guidance – Financial Capability through Personal Finance Education, July 2000.
  21. 21. As a result of interest expressed in the working group meetings to have an opportunity to discuss ways of improving communication and coordination among organisations involved in personal finance education, a meeting was held June 20, 2002 at the FSA of the original working group plus other interested parties. David Knights attended on behalf of the Forum. Basic Skills Agency Commonwealth House 1-19 New Oxford Street London WC1A 1NU Liz Hanson 020 7405 4017 The Basic Skills Agency is the national development agency for literacy, numeracy and related basic skills work in England and Wales. It works with formal education institutions, adult and community organisations, companies, housing and health agencies, and trade unions. It funds local development work, awards quality marks for basic skills, produces and publishes teaching and learning materials, organises conferences and exhibitions, and commissions research and surveys. Following the AdFLAG report, the Agency received a grant of £800,000 from the DfES to carry out its recommendations to involve socially excluded adults in financial literacy programmes. It has: - developed a basic skills awareness raising and training package for advice and information organisations and the financial services sector. In April 2001 the Agency commissioned MORI to conduct a survey to study the relationship between (lack of ) basic skills and financial exclusion (low ownership of financial products). The survey involved administering five basic literacy and five basic numeracy tasks to a sample of over 2000 adults in their homes. The report (Basic Skills and financial exclusion) shows that although those with basic skills difficulties were less likely to own financial products and were more likely to be socially disadvantaged, of those who got less than 7 questions right, 62% had a current account, 45% had a life assurance policy, 34% had a savings account. The survey was intended to raise awareness among providers that many people lacking skills are already their customers, and that they need to take this into account in the way they communicate with them. Consequently, BSA worked with four providers (Lloyds TSB, Yorkshire Building Society, AMP and Consignia) to develop a training video to use with staff to raise awareness of the needs of customers with poor basic skills. It is aimed at front line staff and offers practical suggestions. - Working with the British Bankers Association, the BSA has developed financial literacy learning materials for adults with basic skills needs and established financial literacy and basic skills courses in communities. - produced several packs for tutors and learners which have at least a financial literacy element:
  22. 22. ‘Confident Consumer: a multimedia resource for teaching consumer skills’, developed with the Consumers’ Association, includes budgeting and banking Financial Literacy Pack ‘Making the most of your Money’ (both available June/July) ‘Citizen 2000’ – to develop students’ basic communication skills through citizenship ‘Getting On’ for women preparing to leave prison ‘Work Out Pack’ (includes managing money) developed in partnership with the Prison Service. - working with CABx, credit unions and others in disadvantaged neighbourhoods to improve basic and financial skills, build the capacity of the voluntary organisations in this respect, develop learning models and materials, and link to other learning initiatives. BSA has worked with NIACE on financial literacy for older people, and supported a consultant for and participated in the Adult Financial Literacy Framework Working Group. It will hold a conference in Autumn 2002, at which it has been proposed the framework could be launched. The BSA has also proposed to the DfES for the current financial year 9 regional events for money advisers and others to introduce the framework, but funding has not yet been approved. Learning and Skills Councils In 2001 these replaced the Training and Enterprise Councils (TECs) and Further Education Funding Council, combining their activities. They are responsible for all post-16 education and training of young people and adults outside higher education, including funding and promoting LEA adult education. The national LSC has a budget of £6 billion and responsibility for funding the Further Education sector, workforce development and training, adult and community learning (in partnership with LEAs), providing information, advice and guidance to adults. The LSC has a committee with specific responsibility for adult learners. The 47 local Learning and Skills Councils are supposed to work with local Learning Partnerships and Regional Development Agencies and LEAs. The AdFLAG report recommended that: the Learning and Skills Council should be asked to ensure that there is provision available locally to address financial literacy This should include identification of and, funding of, suitable voluntary organisations which are providing financial literacy programmes. In the past two years the DfES has funded NIACE and the WEA to deliver a series of regional conferences on T’he LSCs and the Voluntary and Community Sector’, to give local LSC staff with responsibility for lifelong learning to liase with and inform these bodies in their area about recent developments in the provision of adult learning, share effective practice, and highlight issues for debate and action.
  23. 23. University for Industry ufi/learndirect Dearing House 1 Young Street Sheffield S1 4UP (0114) 291 5338 Mary Benwell Intended to provide a national on-line and distributed learning network, to ‘boost the competitiveness of business and the employability of individuals’. learndirect is a brand name of the UfI. Although it is a charity, the concept is a company (UfI Limited) with a brand, a product and customers. Its goal is to ‘stimulate demand for lifelong learning’, and ‘promote availability of and access to relevant high quality and innovative learning’, especially through ICTs and especially in disadvantaged communities. It aims to ‘break down barriers to learning by making provision more flexible and accessible, by stimulating new markets to bring down costs, by offering clear, reliable information and advice, and by providing opportunities for people to learn at their own pace and in convenient locations.’ There is intended to be a national network of 1000 IT-based learning centres. By 2002 the target is to have 2.5 m people using the network and services, and 1 million new learners by 2003. Priorities are ICT, numeracy and literacy, and small business skills, According to AdFLAG, UfI has commissioned the FSA to produce ‘a numeracy taster package that will include a section on basic financial issues, e.g., writing a cheque, reading bank statements, etc…. UfI is also working with the FSA to produce an underpinning numeracy package to supplement the FSA online/CD package on adult financial literacy.’ One of the roles of learndirect is to help people find courses on topics in which they are interested. In February 2002, there were six courses nation-wide on ‘money management’. Two are offered in Birmingham on Basic Money Management, elsewhere in England there are two short courses which involve developing maths skills, one is on Money Advice, Debt Management and Counselling (probably for employers) and another is on generic money management. Department for Education and Skills The DfES is involved in financial literacy projects in schools and for adults. It published guidance for teachers on ‘Financial Capability through Personal Financial Education’, and introduced a framework for Citizenship and Personal, Social and Health Education which includes financial capability. The DfES also has a strategy for Adult Learners which includes a commitment to: • Reduce the number of adults who have literacy or numeracy problems by 750,000, by 2004. • Better adult basic skills through Skills for Life - the national strategy for improving adult literacy and numeracy skills. • A revitalised adult and community learning sector.
  24. 24. Adult Basic Skills Strategy Unit DfES Caxton House Tothill Street London SW1H 9NF Jane Bateman The DfES is involved with the Treasury in the Child Trust Fund and Saving Gateway (see below), both of which will have a financial literacy element Strategy and Innovation Unit DfES 8B Sanctuary Buildings Great Smith Street Westminster London SW1P 3BT 0207 925 7375 Nick Oatley Community Finance and Learning Initiative (DES) This initiative is addressed to the problems of financial and social exclusion and under-investment in deprived areas. It is intended to increase access to financial services, and will bring together personal finance education with basic literacy and numeracy skills training, and community business start-up finance schemes. It involves partnerships with community-based organisations, such as CABx, credit unions and housing associations. Together with the Saving Gateway it will be rolled out over the two years, with a budget of just over £2m. Four pilot programmes are being set up in Manchester, London, Cumbria and Cambridgeshire, will begin in August 2002 and run until early 2005. Adult Financial Literacy Advisory Group Under the aegis of the (then) DfEE, the Adult Financial Literacy Advisory Group under the chairmanship of Derek Wanless carried out a consultation to identify gaps in research and in the provision of adult financial education, especially to the socially and financially excluded, and to suggest remedies. This reported in December 2000, and made a large number of recommendations (full report on DFES website). AdFLAG argued ‘There needs to be a systematic approach to promoting financial literacy by spreading examples of good practice and learning lessons from projects and research. Whilst local diversity is crucial to ensure local needs are met, it does present some issues. For example, how can local initiatives be supported from a national level and how to ensure there is provision throughout the country and the quality of that provision is uniform.’ AdFLAG recommended that a formal definition of adult financial literacy should be taken forward by the Adult Basic Skills Strategy Unit, and ‘the DfEE, in discussion with the FSA, should fund further research to determine the current skills level, the level of skills required and common mistakes made by consumers when arriving at
  25. 25. financial decisions’. A national framework for adult financial literacy should be developed (see FSA Adult Financial Capability Framework Working Group). It also recommended the DfEE to help develop a directory or database of resources suitable for use with adult learners and to put it on a website which would be ‘a virtual network for people and organisations in this field’. Qualifications and Curriculum Agency has a Financial Services Sector Advisory Group (FSSAG) and part of their remit is to advise QCA on issues relating to financial literacy. The AdFLAG report recommended that the FSA and Basic Skills Agency consult with the FSSAG when defining adult financial literacy needs and learning objectives, and that they be ‘mapped’ to the new national standards for literacy and numeracy developed by QCA and the Basic Skills Agency. H.M. Treasury Allington Towers 19 Allington Street London SW1E 5EB 020 7270 5044 Keith Davies The Saving Gateway and Child Trust Fund (‘Baby Bond’) are part of the Government’s thinking about asset-based welfare for low income people for whom tax incentives are not relevant, and who currently have no means of saving. The Saving Gateway is an easy account with matched saving as an incentive, like the U.S. Individual Development Account. It is intended to reach low-income people and encourage them to save, introduce training for basic financial literacy to people in deprived neighbourhoods and encourage them to become involved in the financial services available. The Child Trust Fund is an entitlement at birth for all babies to a sum of money to be invested to build an asset, available to the young person at 18. The aim is to encourage long-term saving, and is based on research by Elaine Kempson which showed that low-income people who do save started saving young. It is not yet clear how the CTF will be tied into education. The Treasury has a Savings Incentives Team, which is interested in financial education for children and adults. The Government’s strategy is to promote different kinds of saving: long term and short, rainy day, and for enterprise. Behind the Saving Gateway and Child Trust Fund are the idea that financial education will be more real to people if they have some assets. Emil Levendoglu Saving Incentives Team Room 23/4 Parliament Street London SW1P 3AG 0207 270 4924
  26. 26. The Treasury also has a Home Financial Services Team which ‘deals with retail financial services issues such as innovation, regulation and consumer education’. The Treasury is reportedly in the early stages of thinking about financial education. Starting with Government, they plan to take stock of what the various initiatives are designed to achieve, and look at them together to see whether there are areas that are over- or under- emphasised. This may result in a document. Their view is that there is a lot going on, and that it is more joined up than it appears. Department of Work and Pensions The DWP is responsible for the marketing campaign to raise awareness of pensions (e.g. sheepdog advertising) which has resumed after a year’s break due to the foot and mouth epidemic. It also issues guides for consumers, employers and providers to accompany the stakeholder ad campaign. All can be read on screen, downloaded, ordered in hard copy on line or through the post. The DWP website has a link to, which has a list of guides for employers, providers and individuals, including: A guide to your pension options Pensions for the self-employed State pensions Pensions for women Occupational pensions, Contracted-out pensions Personal pensions Stakeholder pensions There is also a link to pensions information for people of working age. There will be a Pensions Service from April 2002 which will cover among other topics: early retirement pensions inheritance of SERPS retirement pension forecast [BR19] managing on a low income The combined pension forecast project continues. The Government’s eventual aim is to issue 15 million forecasts a year by 2005. Early evidence is that it does not influence people to save more. The DWP has initiated a review of how to simplify pensions legislation, under Alan Pickering. Simplification is intended to increase saving. The DWP is also responsible for various programmes for helping people into work - New Deal, ‘ONE’, Connexions, Working Age Agency – which may include an element of money management. Office of the Pensions Advisory Service OPAS is ‘a non-profit making organisation with some state funding, which uses the voluntary services of pensions experts’ (Vass). It is
  27. 27. funded by the FSA and DSS to run a dedicated Stakeholder helpline to back up publicity material. This is staffed by pensions professionals, and some trained operators. It is intended to resolve queries people still have after reading the publicity material, but will not give advice or recommend a company. Office of Fair Trading Ian Edwards Consumer Education 020 7211 8926 The OFT has had an interest in PFE, produced leaflets associated with personal finances that are commonly used in advice centres, including MoneyFax for young people, and participated in the FSA AFCF Working Group. Other Government organisations which have had an involvement in consumer financial education are the Inland Revenue, Trading Standards Service, Central Office of Information, and DTI.
  28. 28. Industry This section of the report covers the activities of financial services industry bodies and some individual companies in the field of consumer financial education. Association of British Insurers6 The Association recognises the importance of education, and also the different roles that education, information and advice have to play. It appreciates however that encouraging saving is not just about the provision of education, information and advice. Access to information and products need to be clearer and simpler. ABI’s education activities are therefore both broadly and specifically focused. ABI collaborates with key players and acts on its own only where necessary. It operates a [telephone] helpline which deals with enquiries from any party about any insurance matter. Its leaflets and guides are however primarily about general insurance (eg motor, household and private medical insurance). This is because the Department for Work and Pensions produces comprehensive leaflets about pensions, and the Financial Services Authority produces general and specific leaflets on access to long-term financial products. ABI plays an active part in the recognised formal groups. It is • a member of the Personal Finance Education Group (Pfeg) • represented on the FSA’s Consumer Education and Pensions Education Groups • represented on the Adult Financial Literacy Advisory Group working party With its members, ABI is working in partnership with Government on initiatives designed to improve the financial education/information available and to encourage more saving. These initiatives include • Stakeholder pensions • Provision of annual information about the value of a private pension saving plan • Combined Pension Forecasts (provision of annual information about the value of a current private and state pension savings) • Composite Forecasts (provision of information about the value of all pension rights held) 6 Contributed by Anita Wright, ABI., April 2002.
  29. 29. • Pension Credit • Responses and contributions to relevant reviews, for example - The (Treasury) Ron Sandler review on the competitiveness of the long term savings market, - The (DWP) Pickering Review on simplification of pensions - The (FSA) consultation on changes to the polarization review - The (IR) review of annuities With its members, ABI works in partnership with the regulators on industry customer service standards, which compliment and exceed the regulators requirements. • One example of this includes the Raising Standards quality mark, which seeks to guarantee the clarity, relevance and comparability of the information given to a long term savings product purchaser through a standards and accreditation process. • Another example is the pension maturities initiative, which sets standards for communications about the options available for the conversion of a pension savings plan into a retirement income, to those four months before through to the date they retire. With relevant interested parties, ABI is exploring the scope, feasibility, and possible delivery mechanisms for • Workplace based provision of financial information/advice • Generic information/advice ABI commissions research to inform its work. This includes • Oliver Wyman research, which among other things, established the £27billion a year savings gap • Further Oliver Wyman work to look at different simpler regulatory (products and sale) models • Pensions Ready Reckoner Research – to establish how effective a tool a ready reckoner is to encourage pension saving • What would encourage individuals to take out a stakeholder pension. ABI produces discussion papers aimed to encourage debate. Two of these include • One Year on – Stakeholders Revealed • Closing the Savings Gap – The Role of the Pensions Ready Reckoner
  30. 30. British Bankers Association The British Bankers’ Association supports a number of financial inclusion initiatives. It has worked with the Government to increase the availability of Basic Bank Accounts, of which there are now more than 3 million in operation, through 18 providers. It has also worked with Government and the Post Office to provide a Universal Bank, a basic account and basic card facility which will allow benefit claimants to be paid electronically from April 2003. To help people who do not qualify for bank loans, the BBA and its members fund and support credit unions, for example by donations and providing premises and staff. They have also supported the development of a Central Services Organisation to help credit unions become more viable. They have supported the provision of money advice to those who get into financial difficulties both with direct funding, and by supporting a feasibility study to look at a national infrastructure for money advice. The BBA supports financial literacy initiatives, including the Personal Finance Education Group (pfeg) and FSA Adult Financial Capability Framework. It has worked with the Basic Skills Agency to develop learning materials for adults with low financial literacy levels, for use by the CABx, and to provide training for bank staff so that they can deal sympathetically with customers with poor financial skills. For consumers, the BBA publishes leaflets and 36 free ‘BankFact’ sheets on various aspects of everyday banking,ii which are distributed to the public via an automated helpline, CABx and libraries. They can also be downloaded from the BBA website. Also available on the website are leaflets on subjects such as You and the euro, Your money and the Internet, Proving your identity, and Dealing with debt: how your bank can help. Publications include Protecting your financial details. There are also details of 18 banks’ basic accounts. Building Societies Association The BSA supports financial education mainly through existing groups, especially pfeg. Its main educational grants in 1999 were to pfeg, the Money Advice Trust, and the Money Advice Liaison Group, on which the BSA is represented. The BSA provides consumer information/education to the public on savings only, via the telephone and its website. (The Council of Mortgage Lenders provides information on mortgages.) The Building Societies Trust, whose secretary works for the BSA, has the objective to ‘promote and advance the education of the public in commercial and financial subjects, with particular regard to money management, housing, home ownership, building societies and related matters, by providing facilities for such education, providing information and advice on such matters, conducting research, and publishing useful results of such research.’
  31. 31. The BSA has also commissioned and published research on financial inclusion from the University of Newcastle, and has established a working group of building society chief executives to examine financial inclusion. Passbook savings accounts have advantages for people with low levels of financial literacy, and some large building societies also offer basic banking accounts, which allow customers to use debit cards and direct debits without the possibility of going overdrawn.iii Investment Management Association (formed of merger of AUTIF with Fund Managers’ Association in February 2002) Among the objectives of the IMA are ‘to increase public awareness and understanding of investment funds’ and ‘to seek to integrate personal finance education into the school curriculum’. IMA runs the Unit Trust Information Service, which specialises in providing information and education for consumers. The telephone line (020 8207 1361) is answered by a person. UTIS factsheets cover a range of topics, including saving for children, tax free savings, corporate bond funds, ethical investment, and effective investment. They also publish booklets for investors such as a list of fund managers, ‘The Handbook: Saving and Investment in Unit Trusts and Investment Funds in five simple steps’, The Investment Guide: Understanding the Risks and Rewards of Unit Trusts and Investment Funds’, a Directory of unit trusts and OEICs. Most titles can be downloaded from the IMA website (, or hard copies can be ordered by email, or online, and the telephone orderline is also given on the website. The website provides links to data providers such as Bloomberg and the FT, and to other useful sites such as Money World. AUTIF also manages a Financial Awareness and Consumer Education Tracking Survey (FACETS) survey, which began four years ago to track the progress of Government, regulatory and industry efforts to raise awareness and improve overall public understanding of financial issues, so as to chart the development or otherwise of the nation’s levels of financial literacy. The results aim to track levels of knowledge and understanding rather than skills. AITC The Association of Investment Trust Companies produces factsheets and booklets, referrals to companies, and organises investment forums. In 2000-2001 it has run a campaign to raise awareness of investment trusts in general. Media advertising was supported by fact sheets and a website. The advertising however does not explain the
  32. 32. difference between investment trusts and other products, and their appropriateness to particular financial circumstances. IFAP IFA Promotions was established to encourage consumers to seek independent financial advice as well as to improve the image of the sector. Besides providing callers with the names of local IFAs, it publishes booklets and factsheets to help consumers make use of IFAs. These go beyond products and services to deal with financial planning and management in general. IFAP also develops information for the media to highlight potential problem areas for consumers while explaining how IFAs can help. Faculty and Institute of Actuaries Since 1848 part of its charter has been to promote the public interest. It is body with a membership of 10,000, and is financed by subscriptions. They carry out professional education, have good links in the industry and can provide expertise on various issues. Last year they had and inquiry into financial advice to consumers (Banham inquiry); the report is In Place of Micawber. They also recently held a big conference on the ageing population in Edinburgh. The organisation has a Consumer Financial Education Planning Group, whose remit is primarily concerned with the national education system. This group has held three dinners to bring together people from various groups interested in consumer financial education and identify issues in consumer financial education. The first opened the debate, the second (following on from the Banham inquiry) was on education in the workplace, and the third (13 Nov. 2001) was intended to follow on from the AdFLAG report, with an address by Derek Wanless. The Faculty and Institute do not want to take the lead in this themselves but are encouraging others to do so. The Faculty and Institute have also put money into two educational projects: • The Millennium Maths project at Cambridge, to get financial matters into the maths curriculum • to develop an Internet-based module for university students covering both consumer and professional education, together with a consortium of professional bodies (Bank of England, chartered accountants, management accountants, corporate treasurers). Pensions Management Institute The PMI is the professional body for pensions managers. It is an individual membership organisation which includes actuaries, pension lawyers, and pensions advisers. It has a qualification for administrators. It is not directly involved in consumer education,
  33. 33. although the Secretary General is a trustee of the PRA. It does provide a newsletter and seminars for the 600 members of its Trustee Group, mostly lay trustees, to keep them up to date. They are also concerned with education/communication with members of pension schemes. Individual companies Many individual financial services providers have projects concerned with financial education and financial exclusion, a number of which are listed in the AdFLAG report and reproduced as Appendix 4 of the PFEE project final report. Prudential (contributed by Heather Bergdahl) In 2001 Prudential plc announced its intention to contribute to the improvement of financial literacy in the UK by working with charities and educational establishments to deliver financial education programmes to a diverse range of groups across the general population, in particular, but not exclusively, to adults. Prudential plc’s Plan for Life Learning programme emphasises the continuing need to understand about financial planning at different stages in life. The programme will continue to be developed during 2002 in the UK and thereafter internationally. The programme is designed to: • Raise general awareness of financial illiteracy and of the need for financial education • Tackle financial illiteracy through partnerships with NACAB, NIACE and pfeg and through testing and measuring the effectiveness of different approaches to financial education • Promote an understanding of how financial literacy and education has been approached internationally Prudential’s approach is to work with charities who are well placed to offer financial education to diverse groups within the general population. Plan for Life Learning is underpinned by research and evaluation including UK general public research, commissioned international research, and a three year programme with a leading international body, supporting the development of an international financial literacy and education index. The programme will enable adults to gain practical skills in managing personal finance, an increased knowledge of financial issues and an awareness of their short, medium and long-term financial needs. In the UK, Prudential is involved in partnerships with the National Association of Citizens Advice Bureaux (NACAB) (‘Building Financial Capability’), pfeg, and NIACE. Prudential's funding will enable NACAB to develop a financial literacy programme, initially over a 3
  34. 34. year period. A dedicated project manager will help the CAB service to build on existing initiatives and roll out new learning opportunities and guidance on financial matters. Prudential's donation will also be used to establish a fund through which CABx can receive grants for new financial literacy initiatives. Prudential supports the pfeg ‘Excellence and Access’ project to enable teachers to become skilled and confident in teaching personal finance in 400 secondary schools over a four year period. It is also funding an e-learning financial literacy tool developed by NIACE to address the needs of adult learners and their tutors. The on-line tool is the first of its kind to be developed by an independent organisation and will be discussed at NIACE’s ‘Sign Up Now’ conference in the autumn. Financial literacy will be the theme of the conference for 2002. Further, for a second year Prudential is contributing to a schools pack, produced with the endorsement of the DfES and the Learning and Skills Development Agency which is aimed at 16 - 18 year old students. The section of the pack supported by Prudential focuses on achieving financial literacy and enables students to think about planning for their future whilst developing their key skills in communication, IT and numeracy (‘Key Skills in Context - Achieving Financial Literacy’). Standard Life Produced a series of free booklets (‘life:outlined’) covering topics including finance, life events, and health, in association with a range of independent organisations (Samaritans, SOFA etc.) Are sometimes displayed in a Standard Life stall in shopping centres, can be ordered by telephone, and available on the Internet ( Content does not mention Standard Life products and series is not intended to be too closely associated with the company, but booklets bear the Standard Life logo and contact number for the company. Topics related to finance and retirement include: savings and investments, pensions, finance for the over 50s, financial jargon explained, pensions, retirement. Derbyshire Building Society The Derbyshire has focused on literacy and numeracy, with a pilot scheme for primary schools called ‘Counting on you’, and a literacy/numeracy package for older children. They have also developed ‘Read on, write away’ which aims to access adults through their children. Halifax/HBOS The Halifax Bank supports a variety of educational projects across the age range, including The Big Issue Foundation. These are not specifically financial education. It also supports Citizens Advice Bureaux and Money Advice Trust. The Halifax Bank is the
  35. 35. Government’s exclusive partner in the pilots of the Savings Gateway scheme, run in conjunction with the Community Finance and Learning Initiative (DES). The Bank developed a free finance education pack for schools, called Fit for Finance, in conjunction with the Chartered Institute of Bankers in Scotland. This consists of workbooks and videos, and will be assessed after testing with 15 and 16 year olds before a roll-out. NatWest ‘Face to Face with Finance’ Financial Literacy Programme The NatWest funded programme for schools has probably been the most extensive and successful of the personal finance initiatives provided by the private sector. It resides in the Centre for Education in Industry (CEI) within the Institute of Education at Warwick University. The website [] enables teachers to access and print free education materials to use with students in the classroom. The award winning materials teach personal money management and enterprise for 11-19 year olds. A curriculum guide shows how the materials link to subjects, age groups, key skills and keywords. Case studies show how the materials are used in schools. Face 2 Face is a programme of practical, active learning experiences designed to help secondary schools and colleges teach personal money management and enterprise skills within the curriculum. The programme comprises a series of ten modules, each of which can stand alone or be used in conjunction with others. Most of the modules are made up of a number of individual activities. Each module/activity: • can be achieved within the curriculum; • is FREE for any school/college to use, including the high quality support materials and software which are used by the students; • gives teachers/tutors the opportunity to work with a financial expert; • is designed to improve financial literacy. Face 2 Face provides: • stimulating, flexible, up-to-date, easy to use and relevant activities which help teachers deliver elements of the National Curriculum • activities which provide real-life financial learning experiences • a way of linking theory to practice, giving meaning to 'work related learning' • activities that will prepare students for the opportunities, responsibilities and experiences of adult life. Face 2 Face has won many awards including: • Business in the Community - Aim High in 1996, 1997, 1998 and 1999. • Impact Endorsement Award 1999 (supported by the Department of Trade and Industry, British Quality Foundation)
  36. 36. • HM Treasury Seal of Approval for EMU - Economic and Monetary Union module Details of how Face 2 Face delivers aspects of the National Curriculum and the Key Skills can be found on their website. NatWest staff also work with young people in the classroom. Registered teachers can benefit from the expertise of a trained member of NatWest staff.
  37. 37. Summary and Comments Table 1. School children CABx, NCC, NCEP, pfeg, ProShare, FSA, BSA, LSC, Treasury Youth CABx, NCC, BSA, LSC, DWP, OFT Adults CABx, CA, Credit Action, Credit Unions, MMC, NCC, NCEP, NIACE, PRA, ProShare, TUC, FSA, BSA, LSC, UfI, Treasury, DWP, OPAS, OFT, Actuaries Employees/ workplace PRA, ProShare, TUs, some CUs, LSC, ABI, FSA Middle-aged+ PRA, MMC, some employers (pre-retirement) Older people Age Concern, Help the Aged, NIACE The table above shows to what age groups (and to a limited extent what statuses) the efforts of various organisations are targeted. It will be seen that most organisations do not fit neatly into a particular niche; that there is considerable overlap within each age group; and a large number of organisations are concerned with the adult population generally. It should be noted that the fact that several organisations are dealing with a particular group, does not mean that the problem in that area is solved. Their (combined) resources may be totally inadequate, they may be approaching education in the wrong way or have the right ideas and still carry them out ineffectively. It is our impression that there is very little evaluation of the effectiveness of the various groups, and we have not been in a position to carry out such an evaluation. Where possible, we have indicated resources available and made some comments about the nature of materials produced and the general approach. It would be useful to be able to distinguish organisations also according to the level of financial sophistication which they attempt to
  38. 38. address. But it is only possible to do this at the extremes: the Basic Skills Agency is particularly concerned with financial literacy at a basic level, some organisations specialise in debt problems – at the other end perhaps, ProShare is concerned with people who have saved £50-70,000 and need to know how to invest it wisely. But many organisations try to cross the whole spectrum, because they see it as their remit. This is what the FSA does and probably has to do, however it may feel under a special obligation towards ‘vulnerable and inexperienced’ consumers. There are issues in any case with the very idea of ‘levels of financial sophistication’ or ‘financial capability’. One is that it of course involves assumptions about what it is that people ‘need’ to know, and that the structure of this knowledge is somehow linear. People do not slot neatly into pre-conceived levels. Any individual may be quite knowledgeable about some areas and blank about others. This suggests that an approach to education which allows people (especially adults) to pick and choose, and to progress at their own pace, is likely to be most effective. Also, learning is not usually linear – as has often been commented, people are motivated to pick up what they need to know when they need it. They may then forget about it entirely until a similar need arises again, when they may add to their understanding. This is why it is often said that financial education should be attached to ‘life events’. To sit down to ‘learn’ a whole programme at a given level can only be inflicted on children in school. The problem is how best to provide adults with the opportunities to learn when they want to.
  39. 39. References Basic Skills Agency, Basic skills and financial exclusion, 2001. Department of Education and Skills. Adult Financial Literacy Advisory Group Report to the Secretary of State for Education and Employment, December 2000. FSA, Directory of consumer information and enquiry services in personal finance, 1999. Hillage, J, Uden, T, Aldridge, F, Eccles, J. Adult Learning in England: a review. The Institute for Employment Studies/NIACE report 369. Knights, D. and F. Noble, Can Consumers be Educated to Save for Retirement? Interim report of the Personal Finance Education Project, 17 October 2000. ______________________, Personal Financial Education in Employment: Final Report, 6 March 2001. The National Association of Citizens Advice Bureaux, Summing up: bridging the financial literacy divide, 2001. Oliver, Wyman /ABI, The Future Regulation of UK Savings and Investments, 2001. Vass, Jane A guide to the provision of financial services education for consumers, FSA, March 1998. Vass, Jane. Where next for financial advice? Consumer Policy Institute, 2001.
  40. 40. Glossary ABCUL Association of British Credit Unions ABI Association of British Insurers ABSSU Adult Basic Skills Strategy Unit AdFLAG Adult Financial Literacy Advisory Group (DfEE) AFL WG Adult Financial Literacy/Capability Framework Working Group (FSA) AITC Association of Investment Trust Companies ALP Adult Learning Programme (FSA) (now Learn Online) AUTIF Association of Unit Trusts and Investment Funds BBA British Bankers’ Association BSA Basic Skills Agency CA Consumers’ Association CABx Citizens’ Advice Bureaux CPI Consumer Policy Institute CUs Credit Unions DfES Department for Education and Skills (former DfEE) DWP Department of Work and Pensions (former DSS) FE Further Education FSA Financial Services Authority HE Higher Education LEAs Local Education Authorities LSC Learning and Skills Council(s) MMC Money Management Council NACAB National Association of Citizens Advice Bureaux NCC National Consumer Council NCEP National Consumer Education Partnership NFCG National Federation of Consumer Groups NFER National Foundation for Educational Research NIACE National Institute for Adult Continuing Education OFT Office of Fair Trading OPAS Office of the Pensions Advisory Service OPRA Office of the Pensions Regulatory Authority PFE Personal Financial Education PFEE Personal Financial Education in Employment pfeg Personal Finance Education Group PRA Pre-Retirement Association QCA Qualifications and Curriculum Agency TECs Training and Enterprise Councils TUC Trades Union Congress U3A University of the Third Age UfI University for Industry learndirect WEA Workers’ Educational Association
  41. 41. i It was intended to be: ‘ suitable for those consumers who have very little knowledge of the financial system but will also attract those with some degree of understanding and who wish to learn more… The object of the programme is that the interested consumer will be able to: … fully understand the content of promotional literature in the subject area provided to consumers by banks, building societies, product providers and financial advisers – and to use the information to make an informed choice based on: • a realistic assessment of their current circumstances and needs; • the acceptable degree of risk; • their medium and long term life goals’ ii Under headings such as ‘Opening a bank account’, ‘Managing your finances’, ‘Protecting your interests’, ‘Running your bank account’, ‘Banking abroad’, and ‘Borrowing money’. iii AdFLAG