FSA study shows personal financial education in UK is chaotic

The Insitute of Financial Services says a benchmark study by the Financial Services Authority shows personal financial education in the UK is chaotic.

The IFS says the study also shows that the strategies, both present and future proposed, for tackling this vital issue are piecemeal, unstructured and ad hoc.

The survey shows clearly that everybody believes personal finance is an
essential life skill and that it should be a statutory part of the
curriculum. Yet, in more than 70% of schools, personal financial education
was in the form of ‘occasional lessons’ and happening ‘once or twice a term
or less’.

Yet the plans for introducing it into the curriculum from 2008, as part of
something called ‘functional maths’ will not improve this position at all.
The plan is that personal finance will form 10% of ‘functional maths’, which
in turn will amount to approximately 50% of a GCSE. That means that personal finance will form no more than 7.5 hours over two years.

Furthermore, the concept of incorporating personal finance into ‘functional
maths’ is fundamentally flawed. The FSA’s survey shows that maths lessons
are the most common platform for teaching personal finance. This has been
true for decades. Maths teachers have always used everyday examples to
explain maths concepts. But they are teaching maths concepts, not personal

The learning does not transfer. The fact that personal financial capability
in the UK is in such an appalling state is clear evidence of that. Learning
only takes place when it occurs in context and when it is properly

In addition, those who are put off by maths, and it is a dire fact of our
education system that most students are, will see personal financial
education as just that, maths.

And personal financial capability is not just about arithmetic. It is about
understanding the role of money as a key to making most life choices, and
how to prioritise those choices.

Another important point underlined by the survey is the crowded curriculum
in the 14-16 age range. Again this is about priorities. Personal finance capability is as much a core life skill as numeracy, literacy and ICT skills.

John Tiner, chief executive of the FSA, says: “The social and human
implications that arise out of the mismanagement of money are huge and

“But instead of making it a standalone compulsory element that will prepare
young people for life, what is being proposed will do no more than what is
already being done in a piecemeal fashion.”

Finally, the survey, prepared by the National Centre for Social Research,
makes no mention of those structured programmes in the 14-19 range in
schools and colleges that do focus specifically on personal finance with
considerable success. Curiously, these have been ignored, suggesting that
nothing else is occurring in the schools/colleges other than that which is
being provided by the FSA or through citizenship-style programmes.

Yet independent research being conducted by the University of Manchester
showed the huge positive impact of structured personal financial capability
qualifications being provided by organisations such as the Institute of
Financial Services.