Financial Literacy and Inclusion
Following the Financial Literacy and Inclusion Summit in April 2023, The Rt Hon. The Lord Mayor of London, Alderman Nicholas Lyons, convened a Financial Literacy and Inclusion Steering Group to debate, discuss, and devise actions to improve financial literacy, inclusion, and numeracy.
"Low numeracy is one of the largest consumer vulnerabilities affecting the UK. Around half of working-age adults in the UK have the numeracy level expected of a primary school child while millions of adults across the UK do not feel confident to manage their money day-to-day. Not only does this impact the most vulnerable households across the country, it also places an often underestimated deadweight on economic growth. “This six-point plan outlines how the private sector, regulators and Government can collaborate to address financial inclusion and illiteracy from the youngest age upward to create a more resilient and equal society that equips and empowers people to make effective financial decisions."
Nicholas LyonsLord Mayor of the City of London
The Steering Group is made up of experts and industry leaders from Fair4All Finance, National Numeracy, PSHE Association, Plain Numbers, The Financial Inclusion Commission, Legal & General, and FT FLIC. The actions target the priority areas identified by the group as requiring immediate attention and action.
These are a call for action to the Financial Services Sector and Government – their commitment to implement and apply the actions needed to improve financial literacy, inclusion, and numeracy. However, this is a broad and far-reaching issue. The continued support of regulators, local government, NGOs, and the wider professional services sector is vital for systemic change.
Actions
Financial Services Sector
For the Financial Services Sector to commit to the following actions, in order to improve financial literacy, inclusion, and numeracy.
1. Endorse and implement the priority areas of ‘Lack of Resilience’ and ‘Lack of Access’ in Fair4All Finance’s Financial Inclusion Action Plan, specifically the following actions:
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- Supporting the scaling of affordable credit and insurance.
- Increasing the use of open banking and open finance techniques.
- Delivering and scaling fair and affordable debt consolidation products.
- Developing effective auto-enrolment savings products.
2. Apply evidence-based approaches to their communications to make them more accessible for consumers by taking into account the baseline low level of numeracy skills and number confidence among the population and incorporate these approaches into the future designs of products and services.
3. Commit to ensuring that the needs of vulnerable children and young people are addressed in financial education programmes, through increased funding, targeted initiatives, and improved training for practitioners.
4. Commit to improving employee pension participation and progression by supporting employees throughout their working life to develop and hone the skills needed to understand financial information and make effective financial decisions about their current and future financial well-being.
Government
For the Government to commit to the following action, in order to improve financial literacy, inclusion, and numeracy.
5. Ensure that every child and young person in England has the knowledge and skills to understand financial information and make effective financial decisions by making financial education statutory in England in the PSHE curriculum at Key Stage 1 and Key Stage 2.
6. Require all regulators to incorporate the requirement for accessible communications using evidence-based approaches, which takes into account the baseline low level of numeracy skills and number confidence among the population. With the objective to make a similar requirement in future for all government departments and other government bodies.
"We welcome the initiatives led by the Lord Mayor to date, which culminated in the proposals today focusing on tackling short, medium and long-term issues around financial inclusion. “Where we can enable this work we will, for example, we have participated in the development of these recommendations and are already supporting firms to develop innovative solutions through our Sandbox and our work to promote Open Banking. “The Consumer Duty requires firms to ensure their communications to customers meet their needs, and where we communicate with consumers directly we apply accessibility standards and test our content with consumers."
Sheldon MillsExecutive Director for Consumers and Competition, Financial Conduct Authority
"I welcome the work of the Lord Mayor and his action group to promote financial literacy. This is a priority issue for me and I am grateful for industry’s efforts to date in support of this, particularly in promoting financial education. “Low numeracy presents a barrier to people taking charge of their money and making effective use of the products offered by the financial services sector. The Prime Minister has been consistent in his mission to ensure all pupils study maths throughout school, helping them get comfortable with numbers, and laying the foundations for the skills they will need for the jobs of today and the future. “I encourage firms to get behind the Lord Mayor’s actions for industry, building on the fantastic financial education initiatives already in place to ensure that everyone has the skills and confidence needed to benefit from our world-leading financial services sector."
Andrew Griffith MPEconomic Secretary to the Treasury and City Minister
More information
If you are interested in getting involved or want further information contact Maggie Kozyniak.