Tony HazellFeb 8 2017

Lack of financial knowledge! That'll teach 'em!

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Proponents of financial education operate in the twilight zone of the financial sector.

Under-funded, often unloved and unappreciated, a few enlightened individuals attempt to spread the word to regulators, the industry and the wider community. Financial education is vitally important to the economic well being of individuals and the industry that serves them.

While the situation has improved, too many schools still seem to regard finance as some sort of optional luxury squeezed into the wilderness term at the end of year six. Among the adult population, there can still be a shocking degree of naivety and lack of understanding when it comes to even the basics of money management.

From my personal experience, far too many people appear willing to shrug their shoulders and accept that they do not understand rather than get to grips with the gaps in their knowledge.

Against this background the Money Advice Service has released funding for 26 projects through its £7m What Works Fund. Mas admits there is very little evidence of how to address numeracy issues. 

The idea of formal education can also be off-putting, while people can engage when offered an opportunity for a less formal chat. So it is encouraging that among the projects some are centring on training young adults to educate their peers.

Mas is funding a range of approaches from one on one to large scale digital online projects. These include ones aimed at the over-65 age group and others targeting vulnerable groups such as the homeless and those with mental health problems. 

Of course financial comprehension becomes a lot easier if the industry plays ball by making sure it operates in an open and transparent manner.

All the education in the world will not help if people are constantly bamboozled by complex products and marketing material that is designed to hide the nasties while highlighting the goodies.

Those responsible for compliance and regulation can help by ensuring that clarity takes precedence over legalese.

Too often people of all ages are allowed to get into horrendous financial difficulty through borrowing, gambling and over-spending. The financial industry can be far too willing to hand out money and far too reluctant to point out the consequences.

Financial education is one side of the equation, but for the sums to add up the financial industry must accept that it has a social responsibility to help individuals avoid debt and invest wisely.

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FTB growth bolsters struggling housing market

In a see-saw year for the housing market there was one unquestionable piece of good news as first-time buyer activity increased. The 337,000 in the year to the end of November was the most seen in a 12-month period since 2008 according to the Council for Mortgage Lenders.

In November there were 31,300 transaction involving FTBs – an increase of almost 24 per cent on November 2015 and the best month since August 2007.

This suggests measures to put FTBs on a more equal footing are working. The cost of buying a first home also fell in the year to November.

The CML says the FTB market appeared to be unaffected by the various distortions that plagued other market sectors last year, including the stamp duty surcharge on second homes and the EU referendum.

A major snag is the dearth of properties coming on to the market. But if FTBs are finding it easier to pin down a property, then that has to mean we are moving in the right direction.

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Happy days are here again as pension pots give tax income

The £9.2bn released from pension pots since April 2015 has given a timely boost to government coffers in terms of extra tax income.

Some people will have paid more tax than they might otherwise have done because they will have moved themselves into a higher tax bracket.

Then there is the question of what will happen to the money released. Some of it could well end up in other taxable investments or savings accounts. Some will be spent on one off purchases such as cars, kitchens or holidays, giving a further tax boost through VAT.

So there is little doubt that extra tax will have been raised. This will leave the government happy, while investors will also be happy because they have been able to do something meaningful with their money now rather than receiving it in a worthless dribble.

In fact everyone will be happy, except the insurers who are struggling to sell their annuities.

Tony Hazell writes for the Daily Mail's Money Mail section