Speech by John Tiner, Chief Executive, FSA
FSA/HMT Financial Capability Conference, Lancaster House, London
18th October 2006

This morning we joined the leaders of the City on an issue central to the health and prosperity of the British economy – the competitive advantage of our international financial services market

This afternoon it is a great pleasure to join you, the leaders of the retail financial services industry and the many people who help people deal with their money on a matter of crucial importance to the well being of our nation and society – the financial capability of all of our citizens

Ed, you have set out clearly why this is such an important issue for us in this day and age, recognised the significance of the Government’s involvement and identified some of the challenges and opportunities ahead.

I would like to do 4 things:

  • A sales pitch to you to become involved (if you are not already)
  • To reference the power of the baseline study in focussing our work
  • Explain where we are going with money advice
  • To give you examples of how we are impacting the people who most need to raise their financial capability
    But first:

What a wonderful setting for an event such as this. Having entertained such distinguished guests as Queen Victoria and Prince Albert and then such rising stars as Chopin and then only recently London’s fashion week, it seems appropriate that Ed, I, Stephen Timms and several of our colleagues in this work should take to the catwalk in this historical setting

I also want to welcome the Government’s commitment to improving financial capability throughout our country. In particular Ed your commitment to a 10 to 15 year strategy will assure continuity and a joined up government approach which is critical to the success of this work And I want to thank all members of the FCSG and the members of the working groups who have been leading the individual projects to bring us to a stage where we have the platform for serious growth and development across the country.

Three years ago the term “financial capability” had not entered the consciousness of policy makers let alone the lexicon of the financial services marketplace. But today we have started to make a difference to people lives and our challenge is to capitalise on what we have learned and to reach out effectively those most in need.

Initially, the enormity of the task seemed overwhelming. So we needed a clear approach which builds on the simple business concepts of strategy; content; distribution and measurement. We needed to focus on where the need was greatest and where we could achieve speed to market i.e. where existing distribution channels were strong and trusted – whether that be children in schools, students at university, employees in the workplace or tenants of housing associations. Speaking personally, I don’t think it an overstatement to say that the issues facing our society today are the environment, obesity and financial capability.

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So to my 4 points:

(1) the sales pitch:

  • get involved (if not already)
  • Young adults showcase on HMS President
  • Jenny Lindsay – a young Scottish poet who we’ll hear today
  • Young Scot and the Roehampton Institute

I want to emphasise that all the work we are doing is through existing channels and in my view, going forward, customising core content about money expressed in simple, interesting and maybe even exciting terms – whether on paper, on the internet, visually or whatever (and we have plenty of it) and then delivered through people who know their clients, will deliver the fastest and most effective results.

So. I repeat – please think about how your clients, students, patients, employees could benefit from a better understanding about money – and get involved.

(2) the baseline survey:

Headline messages:

  • the major challenges facing the under 40's; and
  • general weakness in planning ahead and choosing financial products. The baseline survey showed that 81% of those under 65 thought the state pension would not provide enough income for retirement, but two fifths of those were making no provision for their own pension. 3.5m people are at tipping point where their debt is concerned, and 12% of the population are struggling or already in some difficulty with their debts.

Source of rich and statistically reliable data to target our efforts, for example it shows some important regional trends

  • it seems that 38% of London's adults are not confident that their retirement income will give them the standard of living they would like in their old age.
  • And 86% of adults from the North East of England have never even considered making financial provision in case of an unexpected drop in income.
  • In this regional analysis, London and the North East of England showed consistently low levels of capability.

In fact, we are already working with our partner organisations in these regions. These include Citizens Advice in North Warwickshire, working with sixth form students and youth groups, and Quaker Social Action, who work with low-income families in London.

And the workplace strand of our strategy is running seminars at a number of employers in the North East, including the likes of financial services firm, GE Money and St Oswald's Hospice, in Newcastle.

The baseline is therefore informing every part of our strategy and roll out. I want to be clear, though, that we should not declare victory. When we re run the survey the survey in around a year and a half, it will be too early to see real change from these strands of work. The survey in five years' time may show some improvement; but I do not expect to see real improvement appearing in these trends for fifteen years or more. That is not to say, either, that we should be in despair; the survey gives us a vital platform to shape and measure growth over the long term.

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(3) Money Advice:

  • Perhaps the most difficult and least developed element to date has been widening the availability of basic level money advice – including, but much broader than simply advice on dealing with problem debt. The programmes in schools, the workplace and elsewhere are providing benefits in this area but there is clearly much more that needs to be done.
  • The key thing we have learned through extensive piloting of what does and doesn't work is that people respond positively to dealing with existing organisations that they already know and trust. Therefore, we have been pressing ahead, forging alliances with existing organisations which hold out the prospect of sustainable delivery and national reach.
  • We have already held preliminary discussions with key intermediary organisations in target sectors, such as Citizens Advice, Age Concern, Help the Aged, One Parent Families and Gingerbread. And we will be looking to make rapid progress on helping them deliver benefits to their clients.
  • As part of accelerating progress here, we plan to build on the successful model we created with the FSA Financial Capability Innovation Fund. This is an initiative that we launched last year to offer seed funding to new and innovative programmes run by existing organisations, aimed at increasing the financial capability of priority and targeted audiences.
  • So we will leverage existing networks and resources and build on the replicability and sustainability of the Innovation Fund projects.
  • The original Innovation Fund provided 12 projects with seed-funding in 2006, several of which are now reaching maturity and look like being taken up nationally. For example:
  • a Chartered Institute of Housing good practice guide created by the Change Partnership - London and Quadrant project is likely to reach around 30,000 housing workers and affiliated professionals; and
  • a new self-help booklet for carers of cancer sufferers has been created by the Omagh Independent Advice Services project, with other cancer charities looking to piggy back on the initiative.
  • I am convinced that this viral marketing, using small, well targeted projects to drive and spread change, provides an economically efficient means to deliver rapid successes. It may be, in time, that there will be a need for a national, centrally designed service in this area, but a scheme of that kind would need to establish a brand and infrastructure and then stimulate the necessary demand for its services. The time to market could therefore be lengthy and this, as well as the cost involved, gives me cause for concern about that kind of centralised approach.
  • As a result of the targeted work I've outlined, we've strengthened links with intermediaries and the introduction of personal accounts for pensions from 2012, we also expect demand for more intensive money advice amongst consumers to rise. So the strategy approach to this issue will need to evolve over time to take account of this.

Money advice is a tricky area where progress has not been as fast as I would have liked. But I am confident that the renewed energy we and our partners are putting into bringing practical benefits to many marks a step change in this element of the strategy. We are particularly keen to explore how Government can contribute to successful outcomes here as part of their 15 year strategy.

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Finally, what else has been going on – other than work in schools, colleges and the workplace which you’ll hear more of in a moment from those in the driving seat.

  • We are delighted with the progress of the Parents' Guide to Money. This is a highly practical tool for expectant parents, which aims to inform and educate about personal finance and planning ahead at a time of huge change in their lives. This attractive and useful file provides tips on – among other things - budgeting for a baby, claiming benefits and returning to work. It also acts as a place to keep all baby-related financial papers and it includes a CD-Rom with six useful calculators.
  • A pilot of this guide is underway and eight employers from different industries have agreed to distribute them to staff on or due to take maternity leave. We'll be evaluating every aspect of the pilot of course and all of the Government Departments and family support organisations involved in designing the file with us are very encouraged by initial reactions.
  • Outside, you may have spotted some stands showing examples of the Parents' Guide to Money and our other projects underway so please do go and take a closer look in the coffee break.
  • And, of course, much of our work to date has been supported by some excellent impartial, easy to use information and on-line tools created for consumers and made widely available through our own consumer website and via partners such as the BBC, advice agencies and, increasingly, regulated firms. Reach is encouraging: the Debt Test and Healthcheck have already had 1.3 million visits and a new, more accessible FSA website for consumers will be launched later this year.
  • This event today allows us to showcase these projects and the tools – the results of many months of hard work by many people from different organisations and different industries. But it's really about showing you what a difference these tools can make so that you will be inspired to join us in extending their reach, getting them to the people that need them most.
  • You and your organisation can help us to reach the vulnerable, the young, the old - and the many that know that they need to sort out their finances but just don't know where to start.

I look forward to working with you all in building the financial capability of the citizens of the UK. Thank you.

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