Improving financial capability – why and how

Shaun MundyHead of Financial Capability Department

Financial Services Authority, UK

• Financial capability – what’s the problem?

• Why and how should regulators get involved?

• How can you make a difference?

• Lessons the FSA can share

• Questions

Content

• In for the long term

• Work in partnership

• Agreed priorities

• In for the long term

• Work in partnership

• Agreed priorities

Financial capability – so what’s the problem?

There’s a problem we have to solve• Demographic change – ageing & fragmentation• Lack of confidence and understanding

No one organisation has the responsibility, incentive or capability to solve it alone

Improvements will take time and new ways of thinking

FSA statutory objectives

• Secure an appropriate degree of protection for consumers

• Promote public understanding of the financial system

Why and how should regulators get involved?

• Consumers who individually

– are financially capable

– are able to take responsibility for their own actions

• Consumers who, as a group, can influence the market

• Know your audience and their needs

• Set priorities

• Create resources bearing in mind audience – eg paper or web?

• Test resources and create evaluation

• Promote resources

• Evaluate and develop

Why? Getting started …

Tips : simple research and evaluation

Focus Groups• Consumers or stakeholders?• Design and test questions first• Explain reasons for focus group, expected length and

‘ground rules’ to keep discussions on track• Offer an incentive – nice lunch or hard cash?

Questionnaires• Bear in mind the objectives of your questionnaire before

you start to draft• Consider how you want to present the results before you

start to draft the questions – scales of approval/agreement to certain statements/percentages of ‘yes’ answers?

• Keep it as short and simple as possible• Test it first!

Consumer information and education:

Website - Online tools, learning and warnings

Consumer publications – covering traditional subjects as well as latest hot topics

Campaigns – raising awareness of current issues and resources

How can you make a difference?

A website

• Personal finance tools and calculators

• Information on issues and generic products

• Tables to allow consumers to compare deals and products

• Service allowing consumers to check if their adviser/lender is authorised

• Learning online

Consumer publications

• Fact sheets and guides

• Plain language

• Relevant distribution channels

Campaigns

• Raise awareness of issues and resources

• Target promotion and ensure that messages match presentation of tools (fun, plain language promotion of complex and time consuming tools or information will not work)

Promotion of resources

• Press office

• Events

• Campaigns

• Direct marketing

• Syndication

• Newsletter for stakeholders

Balance of responsibility

Firms and regulator can share responsibility for providing consumers with information

The FSA-led National Strategy for Financial Capability

Planning the Strategy

AdvisoryGroup

Schools

Retirement

Advice

Borrowing Families

Workplace

Young Adults

FC

Ste

eri

ng

Gro

up

FSA

Contributing organisations

Pu

blic

un

der

stan

din

g

ob

ject

ive

Sta

keh

old

er

ob

ject

ives

Moving the Strategy forward

Working

Groups

research

and plan

pilots

Pilot projects run

Evaluation

Focus on seven

projects for

implementation/further

development

Research to

establish

seven priority

areas/

audiences

2003 2004 2005 Today

Lessons we can share

• Get to know your audience and test new resources

• Set priorities and evaluate progress

• Need to work together with industry, voluntary agencies and Government

• One organisation needs to take the lead

• Build an attractive business case for funding

Any questions?