HISTORIC PRESS RELEASE : Financial Education Must Start Early [May 1999]

The press release issued by HM Treasury on 25 May 1999.

Proposals to improve financial literacy and consumer awareness of mortgages, pensions and other savings investments starting at school age have been welcomed by Economic Secretary Patricia Hewitt.

Welcoming the initiative, developed by the Financial Services Authority (FSA) under its consumer protection and awareness remit and due to be published later this week, Ms Hewitt said:

“Savers and investors are often intimidated by the complexity and range of financial services products available. They need to understand them better to have the confidence to use them effectively. The new role in consumer education for the FSA is a major step forward towards achieving wider understanding and confidence in the financial services industry.

“Helping young savers to learn about savings opportunities and providing league tables for authorised investment products are two ways which the FSA is already developing to improve public awareness of what effective savings products can do for them. At the same time, increased confidence will help the financial services industry to continue to develop the range of products and services it can offer them.”

Speaking about the wider role of the new FSA at the Securities Institute, she added :

“But the new regime we are proposing is about more than just individual consumers. An efficient and effective financial services industry is vital for prosperity, stability and international competitiveness. Millions of people depend on the availability of modern financial services and fair and honest markets and advice. Consumer confidence is the key to success, and simpler, more effective regulation is central to that.

“The FSA will not just be a new regulator: it will be a new kind of regulator. Its new role will cover improving market confidence; protecting savers and investors through increased financial literacy and better consumer education as well as by regulating those involved in financial services; and reducing financial crime.

“It will deliver effective and proportionate regulation of financial services, with a light touch in regulation to minimise burdens on financial services providers but effective consumer protection where necessary. It will offer regulation that works with the grain of customer needs and industry innovation and development: a winning formula for both.

“There will be a single ombudsman scheme to deliver better access to redress when things do go wrong, together with effective safeguards in the disciplinary and market abuse provisions which will ensure effective regulation and increase confidence in the UK industry as the place to do financial services business.

“The FSA will promote public awareness of the financial system, with better understanding of the benefits and risks of the various ways to save and invest, with easy to understand, authoritative information. This will help more people to benefit from savings and investment through better understanding of the financial services market place, encouraging them to demand simpler, cheaper and more flexible products.

“The FSA is already delivering on this. It has published guides to financial advice, pensions, ISAs and the euro, and set up public enquiry points and pensions review help-lines. And as part of its strategy for promoting public understanding of the financial system it has also:

consulted widely on a consumer education strategy to deliver savings education to young savers;
looked at effective ways to improve financial literacy for adult savers so that they can ask the right questions of those selling them financial products; and is developing ideas for league tables of authorised investment products, which could cover cost, access and other terms, enabling consumers to compare products and get the best deals.

“These are all welcome developments. They show that the FSA is already working for the industry and for savers and investors. It is at the heart of our drive towards a new kind of regulation, achieving even higher standards and improving professionalism in the financial services industry.

“We already have one of the best financial services industries in the world, setting standards which other still aspire to. But this should not make us complacent: markets change, technologies develop, consumer requirements grow.

“We must continually strive to find further means to increase professional and consumer confidence and enhance the reputation of the industry at home and abroad. The Financial Services and Markets Bill which will shortly be going before Parliament is a major step towards that goal.”