Young adults and financial capability
Speech by John Tiner
Young Adults Financial Capability Showcase Event
8 March 2006
I was a young adult myself once…
… back when I knew which bands were in the charts and I could buy four pints in the Student Union bar and still have change from a pound.
Well now as Chief Executive of the UK’s financial watchdog and Chairman of the Financial Capability Steering Group, I find myself here introducing an event showcasing some fantastic achievements in finding ways to improve the financial capability of today’s and tomorrow’s young adults.
And of course, I'm here to thank and congratulate all of those involved for the energy and sheer hard work that has made these achievements possible.
What you will see today at this event is evidence that young adults want to learn how to manage their money, that there are ways to teach them, and that, when they learn this life skill, the benefits are undeniable and life changing.
Many in the financial services industry, the Government, the educational world and the charitable and voluntary sector have understood for some years the need to improve the nation’s financial capability.
However, it has taken the force of their combined effort as part of the National Strategy for Financial Capability, along with the expertise and energy of experts who work with young adults, to build a momentum that is now beginning to have a real effect on the lives of 16 – 24 year olds.
Building on the achievements of this strategy so far, we are also presenting our national implementation plan for 2006 and 2007 today. You will find a copy of our strategy document in your delegate pack.
And Trevor Phillips, Chair of the Young Adults Working Group, will explain more about this work later on.
The term ‘financial capability’ may sound like typical financial services jargon and unlike the language any right-minded 16-24 year old would use (it would certainly take a while to ‘text’).
But this is a term that we use to cover a combination of skills and behaviours.
At the end of this month, we will publish the results of the UK’s first ever survey of the nation’s ability to manage money, find help and information, plan ahead and choose financial products.
This isn’t out yet, but early indications are that there are particularly low levels of financial capability among young adults.
Of course, this may not come as a surprise to anyone here – bearing in mind the enormous changes that come about in this stage of life.
Whether staying with mum and dad and starting to earn a wage, moving out of the family home to begin university or trying to support yourself and find a place to live –
This is a time of transformation, upheaval and uncertainty.
For some it is an exciting new beginning when new skills are learnt quickly.
But for too many, solid guidance and support is lacking – making such a pivotal life stage even more treacherous.
This is one of the issues that led me to set up the National Strategy for Financial Capability in 2003.
After all, young people who understand and take control of their financial circumstances are more likely to make sensible choices and adequate provision for their futures.
They are more likely to avoid serious money worries.
And they are less likely to get ripped off.
Back when I was a student, my friends and I would have been referred to as the ‘consumers of the future’.
But today children are acquiring mobile phones and dealing with their monthly payments and pay as you go charges while they are still at school.
Young people are no longer protected from dealing with money until they start to earn a wage.
From 18, students are introduced to the idea of borrowing via their student loan. And when they do start work, they are much less likely to get the sort of pension provision from their employer that those in my generation could benefit from.
This means that it is all the more important that we help these young consumers to improve their financial ‘nous’ at a time when they need it most.
Within the National Strategy for Financial Capability as a whole, work on research and pilots is now over and the implementation of tested initiatives is underway.
These will operate through schools, the workplace, maternity and paternity information, the provision of generic advice, on-line tools, and of course the work to help young adults that we are showcasing today.
We have also launched the first ever FSA Financial Capability Innovation Fund awards. These recently began funding projects run by twelve ‘not for profit’ organisations to help raise levels of financial capability among groups such as families on low incomes and people with learning disabilities.
And in relation to schools, we have been hugely encouraged by the Government’s commitment that financial capability will be embedded more explicitly in the schools curriculum in England by including it in the new functional maths component of the curriculum.
This is a massive step in the right direction, which now needs to be converted into real change in the classroom.
During 2006/07, the workplace element of this programme will expand to deliver material and seminars to employees of all ages, across the UK.
The aim is that by 2010, 4 million employees will have had access to some form of financial guidance through their workplace, with half a million having attended a seminar.
So – personal finance education will reach children in school, and will reach adults young and old at work. However, the groups we are concerned with here today are those studying in higher education and further education, and young adults not in education, employment or training.
Young Adults Working Group
The Young Adults Working Group has run innovative, exciting and well received pilot projects delivering support services to young people. And they have tested different delivery media, and different methods of training those who support and help them.
Clearly, 16 – 24 year olds are hard to reach and engage on the issue of money, though. So, new ways of reaching them electronically and with strong, direct messages have been tested to overcome these challenges.
Throughout, the emphasis has been on delivering messages when they are needed most, and in a way that will be understood and responded to. This is a subject you’ll be hearing more about throughout this event.
Our unique partnership approach to the Financial Capability Strategy overall, bringing together all interested parties and sectors to drive this change, has been a great success.
I’d like to take this opportunity to thank every organisation and individual who has made the progress so far possible. The Scottish Executive Financial Inclusion Unit, in particular, has worked in partnership with us to ensure we learn UK-wide lessons from their major pilot with the new Young Scot Infoline.
Of course, there is so much that I could say about the inspirational work carried out within the pilot projects we’re showcasing here today and the dedication of those involved.
However, I’m delighted that you will be hearing more about this from the young people themselves and from Trevor.
One last thing I will add at this point though is a request…
Do enjoy your time here this morning – I hope that you have all found your sea-legs already and I’m sure that you will enjoy watching the work being presented by these young people.
But please do not set foot back on dry land before you have considered how the projects you will hear about today would work within your organisation and benefit the young people you aim to help.
You see, we don’t just want the representatives of these pilots to showcase their work to you today.
We know this is great stuff and we already have evidence that it can help young people.
The reason we’ve got you all here and trapped you on this impressive vessel is that we would like you to look at this morning’s presentations from the point of view of how this work might be taken on more widely – particularly within your own organisation.
Bear in mind as you watch, that these groups have produced toolkits and training to help other organisations like yours to take this work forward.
Bear in mind all of the young people who have already been able to take control of their finances as a result of this work.
And bear in mind the young people that you aim to help - and the money worries they may be dealing with as we all sit here today.
Then, at the end of the day we would like you to give us some feedback.
Could your organisation become an early developer or adopter of the training and toolkits?
Or might it be prepared to support future work to build up training capacity and possibly develop a national telephone helpline?
We really want to encourage as many of you to get involved as possible, whether you are in a position to use the materials and training we have produced or can influence thinking at a policy level.
We want the drive and enthusiasm of the pilot projects here to inspire you to use their leg-work to create even more of these successes.
We’d also like to convince you that poor financial capability needn’t be an issue that will affect our young people today and blight them and the nation tomorrow.
It is one that can be addressed - the tide is already turning - and you can do your bit to make a difference to many more young people when they are most in need of your help.