View more on these topics

Financial health matters

The Financial Services Authority estimates the cost of the pensions debacle alone to be about £11.8bn. Confidence in the industry is at an all-time low.

Now, some fear a third scandal is on the way as the level of indebtedness in the UK recently hit the symbolic £1 trillion mark. Concerns about lending practices are front-of-mind and with the MPC raising base rate to control the housing market, fears that people have been encouraged to over-commit are widespread.

Calls for responsible lending have never been louder. The need for clearer information and greater sharing of customer data is well documented and progress has been made. Lenders argue that a credit agreement is a contract between two parties and thus responsibility should be shared. Herein, however, lies the crux of the problem.

An NOP survey commissioned by the FSA reports that a third of all British adults prefer not to think about planning their finances, over a quarter think they are not good at managing their money and two thirds say they would be more confident about dealing with their personal finances if they had learned more about the subject at school. With one in four people suffering from numeracy or literacy difficulties, a significant proportion of the population simply does not have the skills to make good financial decisions. So how can they be held responsible for the important decisions that they take?

Recognising this the FSA, through its Strategy to Build Financial Capability in the UK, is working to improve access to financial education, information and advice. As a better informed and educated public will make more knowledgeable financial decisions, scandals will become a thing of the past and confidence in the sector will be restored.

There is a strong political will to improve financial capability. The benefits are widely acknowledged and while everyone is in agreement that something must be done, the question of who pays looms large and threatens to slow progress. Rather than asking if we can build financial capability – of course we can – the real question remains: are we willing to invest now to prevent future scandals or will it take one more before we feel compelled to act?

Shirley Woolham is financial health business manager at CPP Group

Recommended

HBOS could sell BM to prepare for Abbey bid

The Midlands press is already speculating over the future of BM. HBOS has a 22% share of the UK mortgage market while Abbey has 11%. But combined they would control one third of the market – something competition watchdogs would likely rule out as consumer choice would be stifled and HBOS would become an unstoppable […]

Bankhall planning to expand into Europe

It says it will use its expertise gained in the UK to capitalise on the introduction of the European Insurance Mediation Directive which will bring regulation to all member states from January 15. Group sales director Shaun Godfrey says: “The directive means that 250,000 firms across Europe are about to be regulated in some form […]

FSA measures consumers&#39 financial capability

Addressing a discussion, Financial Capability: Making informed decisions about mortgages, held at the House of Commons last week, the FSA said the baseline survey is progressing well. Part of the regulator&#39s remit is to help the public understand financial issues and ensure they do not buy unsuitable products. The industry and politicians agree that it […]

UCB sees first signs of buy-to-let slowdown

In a report out from the Nationwide subsidiary, London and the South-East are highlighted as areas where there is considerable pressure on rental yields, as opposed to the North where prices are lower and yields higher. Charles Reed, managing director of UCB Home Loans, says: The market is still very buoyant, as would be expected […]

Infographic - thumbnail

Infographic — health cash plans 2014

Health Shield has strengthened its position in the cash plan market, according to the latest Laing & Buisson report, increasing its market share by income from £27m in 2012 to £29m in 2013. The Health Cover UK Market Report 2014 revealed that the non-profit-making Friendly Society was the only provider in the top four to have increased its market share by income over the past year. Health Shield was also the only cash plan provider in the top four to have increased its market share by income every year for the previous five years. This infographic presents the figures.