RegulationSep 15 2014

Simplify language to boost financial literacy: report

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Financial services companies must reduce the use of complex jargon, express costs for credit products in simple to understand pounds and pence figures rather than percentages and offering increased support to boost financial literacy levels, a new report has argued.

Published by a group of more than 50 organisations led by the Money Advice Service, the Financial Capability Strategy calls on regulators and the financial services industry to work together more effectively in order to increase people’s capability to manage their money.

It highlights obstacles to good money management, such as complex jargon, difficulties in accessing support and the constant social pressure to spend money, adding that reforms to pensions from next April will make money management even more important.

A range of requests on financial services business to make products and services more accessible includes:

• simplifying terms and conditions;

• setting out the costs of credit clearly in pounds and pence rather than percentages;

• supporting people who still have a mortgage at retirement; and

• funding initiatives which are proven to work in terms of improving people’s money habits.

The document also recommended starting financial education in primary school, and urged parents to help children develop good money habits from the earliest age.

The steering group developing the strategy has been chaired by Joanne Shaw, non-executive director of the Money Advice Service. Other senior figures include Association of British Insurers director general Otto Thoresen, Financial Services Consumer Panel chair Sue Lewis, British Bankers Association chief executive Anthony Browne and Financial Conduct Authority head of consumer and market intelligence Jonathan Phelan.

Ms Shaw said that many people in the UK grow up with attitudes that 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.”

Contributions to the consultation must be submitted by 24 October, when the draft strategy will be revised and a final version published in early 2015.