Educate for financial capability, says FSA
23 per cent of people in the UK cannot use a telephone directory, 80 per cent misunderstand the term APR, 40 per cent admit not understanding financial products, and more than 20 per cent are confused by percentages. On Monday the Chairman of the Financial Services Authority said education is key.Speaking at the launch of the Child Poverty Action Group Handbook on Monday, Callum McCarthy expressed concern for the widening gap between the financial understanding and financial responsibilities of individuals.
A substantial proportion of the population, he said, had trouble with even a very basic level of financial understanding. This is confounded by the increasing responsibility of individuals for financial decisions: for example, decisions about pensions, which used to be taken by the employer; student education; and health provision.
"This growing move to require the individual consumer to take responsibility for his or her financial decisions places greater strain on the need for basic financial capability - the ability of individuals, as customers of financial services firms, to make informed decisions between the many choices available to them", he said.
The FSA, said McCarthy, will work on better, clearer information and on better, more responsible sales practices. "But neither", he warned, "will be effective without more capable customers".
"The principal responsibility for a society with literate and numerate citizens clearly lies with government, and with the education system, not with the financial services regulator", he said.
The Citizenship Foundation firmly believes that financial and economic literacy, both personal and public, is an important part of citizenship education. An informed understanding of public issues and personal choices cannot exist without an understanding of their financial implications.
As part of its contribution to this field, the Citizenship Foundation has produced Money Money Money, a website offering basic financial information. Issues range from benefits, through student loans to work and pensions.