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The financial capability agenda

The financial capability agenda. Joanna Bibby-Scullion HM Treasury. Key announcements so far…. May - Coalition Agreement June - Budget July - Speech at CFEB conference Tomorrow - Spending review. Setting the scene. Personal responsibility. Consumer protection. Preventative.

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The financial capability agenda

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  1. The financial capability agenda Joanna Bibby-Scullion HM Treasury

  2. Key announcements so far… • May - Coalition Agreement • June - Budget • July - Speech at CFEB conference • Tomorrow - Spending review

  3. Setting the scene Personal responsibility Consumer protection Preventative Behavioural economics Savings

  4. Consumer protection • Strong commitment to consumer protection • We are setting up the Consumer Protection and Markets Authority • Primary objective of ensuring confidence in financial services and markets, with particular focus on protecting consumers and ensuring market integrity.

  5. Savings • Recent levels of household saving have been too low. • To ensure a sustainable and balanced economic recovery, the Government needs to encourage people to save and invest. This will not only improve personal financial responsibility but also planning for retirement. • The Government wants a saving system based on freedom, fairness and responsibility, as well as ensuring lasting affordability and measureable effectiveness. • These principles will guide the Government’s aims of rewarding saving, supporting pensions, and helping vulnerable households to smooth their expenditure

  6. Behavioural economics

  7. Personal responsibility • Show people how to deal with the challenges they face and give them the tools to manage them on their own in the future • Encourage individuals to be proactive in seeking help early • Help people take responsibility for their finances

  8. So where does financial capability fit in...? Personal responsibility Consumer protection Preventative Behavioural economics Savings

  9. Old terminology – New terminology

  10. Money Guidance evaluation – levels of use and channels • No other national service is the exact equivalent to Money Guidance. • Users say they are seeking guidance they would have been unlikely to seek elsewhere. • The three delivery channels are complementary; they attract different demographics and answer different queries • It reached those people who need the service

  11. Money Guidance evaluation – outcomes and impact • Most users said that they received all the information and guidance they required. • The vast majority of users said that the guidance had been important in helping them decide what to do. • Face-to-face users were likely to have improved their financial capability two months after using the service • Two thirds had reached, or taken steps towards reaching, an outcome two months after using service

  12. Money Guidance evaluation - satisfaction • Overall levels of satisfaction were high two months after using the service. • F2F - 75% of users very satisfied • Phone - 64% very satisfied • Website - 55% very satisfied • Half of the face to face users had recommended it to someone else after using it

  13. National financial advice service • “We will create Britain’s first free national financial advice service” • This will be taken forward by the Consumer Financial Education Body and funded by a social responsibility levy on the industry • To be launched spring 2011 • It will build on learnings from the past

  14. What is staying the same? • Thoresen principles • Impartial • Universal • Preventative • Supportive • On the side of the consumer • A multi-channel service • Partnership model important

  15. How has the focus changed? • Encouraging people to save • Helping give people the skills and confidence to become more financially resilient and personally responsible for their money • Encouraging people to take action

  16. Annual financial health check • “The Government has asked the Consumer Financial Education Body to develop a new annual family financial healthcheck” • To be launched in spring 2011 • It will be a key part of the national financial advice service

  17. What will the healthcheck do? • The healthcheck will: • Help people take a thorough look at their finances • Show them where they are most at risk • And show them how they can regain control and plan for the future • People will get a prescription at the end of it

  18. Consumer Financial Education Body • Set up by the Financial Services Act – April 2010 • Aims: to enhance: • the understanding and knowledge of members of the public of financial matters (including the UK financial system); and • the ability of members of the public to manage their own financial affairs.

  19. Simple products • A new range of straightforward products that “do what they say on the tin” • The aim is to help people make better choices • We are working with industry and consumer groups • First consultation to be published by the end of the year

  20. Conclusions • Financial capability is an integral part in promoting personal responsibility • Currently working towards launch of national financial advice service and annual financial healthcheck in spring • Partnership working is important

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