The Lord Mayor of the City of London has led a group calling for financial education to be made statutory in primary schools, in a raft of new measures to tackle financial illiteracy in the United Kingdom.
The Financial Literacy and Inclusion Steering Group, chaired by the Lord Mayor, Nicholas Lyons, announced a six-point plan to address low levels of financial literacy, inclusion and numeracy across the country.
The Steering Group, which has been endorsed by the Financial Conduct Authority, Aviva and the Economic Secretary to the Treasury and City Minister, Andrew Griffith MP, identified a lack of consistent financial education within the school curriculum and an overrepresentation of certain demographics in financial hardship including low-income families, single parents, women, ethnic minorities and renters.
There are at least 17.5 million people in financially vulnerable circumstances – nearly a third of all adults in the UK. Within this number, there are millions unable to access the safety nets others rely on such as affordable credit, insurance and savings. This number is on the rise as the pressures of the pandemic and the cost-of-living crisis remain.
The six-point plan, shaped by the Steering Group and announced at a dinner yesterday night [9 October] for the Lord Mayor hosted by the Archbishop of Canterbury, considers both private sector and Government measures to improve financial literacy, inclusion and numeracy:
- Increase accessibility to affordable credit and insurance and deliver affordable debt consolidation products.
- Apply evidence-based approaches to communications to become more accessible for consumers taking into account the baseline low level of numeracy skills and number confidence among the population;
- Commit to ensuring that the needs of vulnerable children and young people are addressed in financial education programmes, through increased funding, targeted initiatives, and improved training for practitioners;
- Commit to improving employee pension participation and progression by supporting employees throughout their working life to understand financial information;
- Make financial education statutory in England in the PSHE curriculum at KS1 and KS2;
- Require all regulators to incorporate the requirement for accessible communications using evidence-based approaches with the objective to make a similar requirement in future for all Government departments and other Government bodies.
The Steering Group members include the City of London Corporation, National Numeracy, Fair4All Finance, the Financial Inclusion Commission, PSHE Association, Plain Numbers and the Financial Times Financial Literacy and Inclusion Campaign. It has also received the following endorsements from the Financial Conduct Authority, Aviva, and the Economic Secretary to the Treasury and City Minister, Andrew Griffith MP.
Nicholas Lyons, the Lord Mayor of the City of London, said:
“Low numeracy is one of the largest consumer vulnerabilities affecting the UK. Around half of working-age adults in the UK have the numeracy level expected of a primary school child while millions of adults across the UK do not feel confident to manage their money day-to-day. Not only does this impact the most vulnerable households across the country, it also places an often underestimated deadweight on economic growth.
“This six-point plan outlines how the private sector, regulators and Government can collaborate to address financial inclusion and illiteracy from the youngest age upward to create a more resilient and equal society that equips and empowers people to make effective financial decisions.”
Andrew Griffith MP, Economic Secretary to the Treasury and City Minister, said:
“I welcome the work of the Lord Mayor and his action group to promote financial literacy. This is a priority issue for me and I am grateful for industry’s efforts to date in support of this, particularly in promoting financial education.
“Low numeracy presents a barrier to people taking charge of their money and making effective use of the products offered by the financial services sector. The Prime Minister has been consistent in his mission to ensure all pupils study maths throughout school, helping them get comfortable with numbers, and laying the foundations for the skills they will need for the jobs of today and the future.
“I encourage firms to get behind the Lord Mayor’s actions for industry, building on the fantastic financial education initiatives already in place to ensure that everyone has the skills and confidence needed to benefit from our world-leading financial services sector.”
Sacha Romanovitch OBE, CEO of Fair4All Finance, said:
“Financial exclusion is a key barrier to opportunity affecting millions of people. We thank the Lord Mayor for shining a light on this issue and welcome these actions and the call for collaboration across the financial services sector.
“Financial inclusion means that individuals, regardless of their background, income or personal circumstances, are aware of and have timely access to appropriate and affordable financial products and services which enable them to manage their finances day to day, build their long term financial resilience and wellbeing and participate in society.
“Financial inclusion works alongside financial education so that people have both access to the right solutions and the understanding to make the best choices for them. All of this benefits society and boosts the economy.
“We’re working with the industry, government and regulators to increase access and availability of products such as affordable credit and insurance. One example is our affordable debt consolidation lending pilot, aimed at helping people stay afloat and supporting them before they reach the need for formal debt solutions.”
Sheldon Mills, Executive Director for Consumers and Competition, Financial Conduct Authority, said:
“We welcome the initiatives led by the Lord Mayor to date, which culminated in the proposals today focusing on tackling short, medium and long-term issues around financial inclusion.
“Where we can enable this work we will, for example, we have participated in the development of these recommendations and are already supporting firms to develop innovative solutions through our Sandbox and our work to promote Open Banking.
“The Consumer Duty requires firms to ensure their communications to customers meet their needs, and where we communicate with consumers directly we apply accessibility standards and test our content with consumers.”
Justin Welby, the Archbishop of Canterbury, said:
“I wholeheartedly support the Lord Mayor’s call on the financial services sector and the Government to improve financial literacy and inclusion, particularly for children and young people. Financial literacy shouldn’t be a privilege for those who are already fortunate; it should be available to every person because it transforms individuals, communities, and economies.
“When people feel confident in understanding their finances and have the appropriate tools and products, new opportunities become possible, resilience is built, and people are able to participate as full members of their societies. In our scriptures Jesus often talks about money, because He calls us to recognise what is truly valuable in this world – each child of God, who is loved beyond any price.”
Patrick Jenkins, Chair of the Financial Times Financial Literacy and Inclusion Campaign said :
“Teaching young people about the basics of finance from an early age is a win-win: a little bit of knowledge will help them avoid pitfalls of financial scams and rip-off debt as they grow up, but will also empower them to invest and found businesses with confidence.”
Jenny Barksfield, PSHE Association Deputy Chief Executive & Director of Education, said:
“We welcome these practical and timely recommendations from the Lord Mayor and his Financial Literacy and Inclusion Steering Group.
“Too many pupils – and especially those from disadvantaged backgrounds – miss out on learning about budgeting, saving and on developing an entrepreneurial perspective, and lack the financial literacy to avoid online fraud and other increasingly complex financial harms. In the case of ‘Action 5’, making financial education a statutory part of personal, social, health and economic (PSHE) education from key stage 1, would guarantee access for all pupils, not just those in independent schools (the only schools in which this aspect of PSHE is already compulsory).
“Of course, increasing numeracy is crucial, and is rightly reflected across the Lord Mayor’s recommendations; however, increasing numeracy alone will not prepare children for such complex challenges and must be accompanied by robust PSHE education content from an early age.”
Helen Povah, Public Sector Client Management Director, Aon, and Owen Morris, Managing Director – Personal Lines, Aviva, jointly said:
“We are grateful to the Lord Mayor and City of London Corporation for their continued focus and support for Financial Inclusion. These actions will help tackle financial vulnerability and we look forward to continuing to work together.
“We are committed to playing our part in helping some of the most underserved in society. One example is our joint initiative to provide accessible and cost-effective insurance for social housing tenants who are among the most likely to be uninsured and struggle to replace damaged or stolen property.
“This, and other examples, show the important role the insurance industry can play in tackling financial vulnerability.”
David Huntley, Chair, Scottish Friendly, said:
“Our intention is to create a pathway to straightforward investing for customers, so they are best placed to make informed financial decisions. We believe the proposed actions align strongly with that intention. With our ambition to become the UK’s leading financial mutual insurer, our main priority continues to be that of delivering value for our members through affordable and accessible products. We therefore fully support any efforts to improve the financial services industry for our customers and to provide greater resources to a currently underserved market.
“We strongly believe that implementing resources to improve financial education, particularly for young people, should undoubtedly be a core focus for our industry.”
“That being said, we would like to highlight, particularly given our Scottish domicile, that this should be a vital focus for the whole of the UK and hence necessitating a call to action from the devolved parliaments as well as Westminster to make these resources accessible nationwide.”
Robin Fieth, Chief Executive of the Building Societies Association, said:
“We fully support the priority actions the Lord Mayor’s steering group has outlined for the financial services sector and the government.
“Improving financial capability among their current and future customer-members is important to building societies and credit unions. Many have well-developed long-standing schemes and programmes with local schools and colleges to deliver both classroom-based and applied financial education.”