News

Consultation Opens on Improving the UK Population's Money Management New strategy to address attitudes and skills about money

Monday 15 September 2014

Parents, schools, early years professionals, the financial services industry, charities and regulators all need to work together more effectively to increase people’s capability to manage their money. This is the recommendation of over 50 organisations, led by the Money Advice Service, who have joined forces to explore ways of improving the UK population’s money management.

Poor skills, knowledge and attitudes

Poor skills, knowledge and attitudes towards money hamper millions of people from getting to grips with their finances.

• 50% of people don’t make a personal budget
• 48% admit they fall into debt as a result of their social lives
• Only 20% can be considered to be financially secure or resilient enough to withstand financial shocks.

Barriers to good money management

People face many obstacles to good money management, such as complex jargon, difficulties in accessing support and the constant social pressure to spend money. Reforms to pensions from April 2015 will make money management even more important.

From cradle to grave

The Financial Capability Strategy for the UK, published in draft for consultation, seeks to address these problems. It highlights that people need support with their money habits not just when they are young, but right through their life, almost from cradle to grave.

It also makes it clear that attitudes and motivations towards money have as great an effect on people’s money habits as their skills and knowledge.

Key recommendations include:

• Parents can do much more to help their children develop good money habits, from the earliest age
• Financial education should start in primary school
• The financial services industry needs to do more to make its products and services more accessible, by, for example simplifying terms and conditions, setting out the costs of credit clearly in pounds and pence, not percentages
• Better support is needed for people who still have a mortgage at retirement; older people’s organisations and the advice sector need to work with industry to reach the people who need help
• Funding should be directed towards initiatives which are proven to work in terms of improving people’s money habits.

The draft strategy also sets out an ambition to challenge social trends which encourage people to spend and live for the here and now rather than plan for the future.

Joanne Shaw, Chair of the Financial Capability Steering Group, said:

“The evidence shows millions of people across the UK need help to manage their money better. Many do not have the right skills and knowledge and grow up with attitudes that, in the end, lead to serious money problems.

“There are already some highly effective initiatives – but we all, meaning the financial services sector, charities, regulators, government and the Money Advice Service, need to work together to ensure that people gain the experience, skills and confidence that will enable them to be great money managers.

“We now want to hear from people around the UK – individuals, communities and organisations – on how we can achieve this, and how we can make being ‘good with money’ the norm.”

ENDS

NOTES TO EDITORS

1) The Financial Capability Strategy for the UK is available at fincap.moneyadviceservice.org.ukopens in new window . The deadline for consultation responses is 24 October 2014. The draft strategy will then be revised and a final version will be published in early 2015.

2) The steering group of experts which has developed the strategy has been comprised of: Joanne Shaw, Chair of the group and Money Advice Service non-executive director, Anthony Browne, Chief Executive, BBA; Otto Thoresen, Director General, Association of British Insurers; Gillian Guy, Chief Executive, Citizens Advice; Mike O’Connor, Chief Executive, StepChange Debt Charity; Sue Lewis, Chair, Financial Services Consumer Panel; Tracey Bleakley, Chief Executive, pfeg; Jonathan Phelan, Financial Conduct Authority; Anna Deibel-Jung, HM Treasury; Caroline Rookes, Chief Executive, Money Advice Service.

About the Money Advice Service

The Money Advice Service is an independent organisation. It gives free, unbiased money advice online at moneyadviceservice.org.uk, over the phone on 0300 500 5000, and face-to-face right across the UK. The Service was set up by Government and is paid for by a statutory levy on the financial services industry, raised through the Financial Conduct Authority. Its statutory objectives are to enhance the understanding and knowledge of members of the public about financial matters (including the UK financial system); and to enhance the ability of members of the public to manage their own financial affairs.

For more information, please contact: The Money Advice Service press office on 020 7943 0593 or pressoffice@moneyadviceservice.org.uk