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Published: 18 January 2007

Long-term Financial Capability

Ed Balls, the Economic Secretary to the Treasury and James Purnell, Pensions Reform Minister, have launched the Government's long-term approach to financial capability.

A new taskforce, led by Otto Thoresen, Chief Executive of AEGON UK, has been asked to research & design a national generic financial advice service – ‘ensuring that every person, including those on the lowest incomes, can get quick, easy and simple access to good quality financial advice’.

A cross-departmental Ministerial group will co-ordinate the Government's work plan to enhance financial capability ensure Government programmes link effectively to the new advice service.

The Government believes that everyone in society has the right to get advice they can understand and trust on the financial options available to them, from getting out of debt through to choosing a home and saving for a pension.

Otto Thoresen will report to Ministers by the end of 2007.

The Government will publish an action plan by the end of 2007 setting out how financial capability will be integrated into existing services, particularly for those most vulnerable to the consequences of poor financial skills and taking forward plans for a national approach to generic financial advice.

Ed Balls said:

"We want everyone in society to have access to, and use, financial services with confidence.

So we must use all the levers we can to improve financial understanding and capability, including the Child Trust Fund.

Financial decisions are difficult. Financial products are complicated and there can be too much jargon.

This puts people off, or they can end up buying something that is not right for them.

Sometimes people just want to discuss their financial options and not buy anything.

We believe there is a gap in the provision of this last type of advice - generic advice - and I have asked Otto Thoresen to research and design a national approach for filling this gap.

I am determined that we should extend the benefits of generic advice to all consumers who need it."

James Purnell said:

"Millions of today's workers are not saving enough for their retirement.

That's why we are making it much simpler for people to save through automatic enrolment into a new system of personal accounts, or into workplace pension schemes.

Automatic enrolment will help people save. But it will still be their decision whether to opt out, and how to invest their money.

Generic financial advice will be vital to help them make those decisions, and a wide range of stakeholders have urged us to ensure that is available”.

John Tiner, Chief Executive of the Financial Services Authority, said:

"I am delighted that Otto Thoresen will lead a study into the provision of generic money advice, a key component of the National Strategy for Financial Capability, and believe that the new ministerial group will bring focus and determination to the Government's major policy initiatives such as financial education in schools.

This paper complements the current programme being delivered under the auspices of the FSA's National Strategy for Financial Capability which is helping millions of people become more confident in managing their money.

The programme is ambitious and already 500 schools have signed up to Learning Money Matters, the Money Doctors toolkit is available in 19 universities and the Workplace programme has issued 148,000 packs of educational material."

The Government also announced that it will promote financial education in schools by:

· working with financial education bodies to ensure that teachers have adequate resources to support the use of the Child Trust Fund as a tool for teaching financial education

· providing new curriculum guidance for schools on financial education. And

· developing further plans for a Schools Money Week as an additional focus for financial education within the academic year

The Government's long-term aspirations are that:

· All children and young people have access to a planned and coherent programme of personal finance education, so they leave school with the skills and confidence to manage their money well

· All adults in the UK have access to high quality generic financial advice to help them to engage with their financial affairs and make effective decisions about their money, and

· A range of Government programmes are focussed on improving financial capability, particularly to help those who are most vulnerable to the consequences of poor financial decisions

The Government intends to review the policies and programmes which have the potential to raise financial capability, and to set long-term goals for the contribution each can make.

This will include every child matters, the curriculum, CTF, adult skills, planning for retirement, parents and carers and ensuring there is sufficient signposting of information about personal finance.

Further information