Fortnightly financial five minutes #33 Stewart Perry

Please can you tell us about The Centre for Financial Capability and your role there?

The Centre for Financial Capability (TCFC) is a UK charity with a mission to ensure every child and young person in the UK benefits from an effective financial education, starting in primary school.

According to evidence published by the Money and Pensions service, by the age of seven, our relationship with money is already forming[1]. Shockingly, in a country boasting over a hundred youth financial education programs[2], only a third of our youth receive any formal financial education in school[3].

The need for early financial education is clear, yet the status quo is not working because:

1. Financial literacy is not a statutory subject in our education system, leaving it unmeasured in the schools assessment framework and undervalued.
2. Our brilliant educators, pressed for time and resources, often lack the necessary tools, expertise and support to impart this essential knowledge.
3. Efforts to educate are unevenly distributed, creating glaring gaps in provision in areas most in need.

As Director, my role is to manage the day-to-day activity of the Centre, working with our amazing Trustees to move the dial on financial education in the UK. Specifically, that means directing and overseeing the following:

1. Production of pioneering research: We publish research to address critical gaps in our knowledge about what’s needed and what works, and to raise awareness of the critical need for financial education from a young age.
2. Policy advocacy: We bring changemakers together and engage with policymakers, aiming to sculpt an education system where financial literacy is not just encouraged but integrated as an assessed, statutory subject.
3. Development of innovative solutions: We fund the development and deployment of creative, impactful financial education initiatives to help reach more young people.

Why is it so important to start young in helping people navigate key financial decisions in their lives?

According to the FCA’s latest Financial Lives Survey, a staggering 24 million adults do not feel confident managing money, and nearly 13 million grapple with financial difficulty, heavily burdened by credit commitments and having little to no savings to call on.

While it is important not to oversimplify the issue – an array of socio-economic factors outside of our control can play a role in shaping our financial lives - we cannot ignore evidence that shows individuals with higher financial literacy are better equipped to handle income shocks, save for the future and avoid unsustainable debt[4]. The Centre for Social Justice research also reveals that nearly half of adults in financial distress attribute their predicament to poor money management skills[5].

While we endorse lifelong financial education, we know that foundational money habits – good and bad – form around the age of seven. That’s why it is critical we help children and young people learn about and experience money as early as possible. In doing so, we lay solid foundations on which young people can become more confident and informed in navigating money and financial decisions later in life.

You do quite a lot of work around policy, working with government and other stakeholders, can you tell us about your latest work in this area?

Since 2021, we have led efforts to secure funds from the Dormant Asset Scheme for financial education. The Dormant Assets Scheme is a Government backed initiative with the aim of reuniting people with their financial assets (e.g. cash left in a bank account). Where this is not possible, the scheme enables the transfer of dormant assets toward social and environmental initiatives across the UK.

We were delighted that in March 2023, the Government announced that it would explore how financial education can additionally be supported by dormant assets from 2024 onwards, in line with its broad definition of financial inclusion. According to the Government’s estimates, this could release around £87.5m between 2024 and 2028 for financial inclusion and financial education.

We are in on-going discussions with the Government over how funds might be best deployed to boost financial education. We are hoping for a positive conclusion early in 2024.

You conduct a range of research to support the delivery of financial education in schools, can you share some recent learnings?

We recently published our annual polling around consumer experiences of Buy Now, Pay Later (BNPL) products in the UK.

We found:

• 40% of 18-34 year-olds said they have used a BNPL product

Of those who used a BNPL product:

• Over a quarter of 18-34 year-olds were unclear on late-repayment fees if they missed a payment.
• Over a third of 18-34 year-olds missed BNPL repayments in the last six months.
• Almost a third of 18-34 year-olds have missed repayments in the last six months and been charged late-repayment fees.
• Of those who missed repayments, over a quarter of all age groups had been contacted by a debt collection agency.

With this polling we want to highlight a small but powerful example of how a low financial literacy combined with the increasing accessibility of complex financial products can have unintended consequences that could have a long-term impact on consumers.

And finally, on a more personal note, a question we ask most of our guests: if £10,000 landed in your lap tomorrow, what would you do with it?

If £10k landed on my lap out of nowhere, I would put a good chunk of it towards a long trip with my partner, as we both love adventures to experience different places and cultures. I would, of course, donate the rest to The Centre for Financial Capability’s mission to ensure every child and young person in the UK benefits from financial education.

Thanks so much for all that really useful background Stewart.

For more information on what FSCS protects, see our What we cover page.

The content of any discussions shouldn't be taken as an indication of future FSCS policy positions. The views expressed by guests are their own and don't reflect the views of FSCS.

[1] Money and Pensions Service, Habit Formation and Learning in Young Children, 2013

[2] Money and Pensions Service, Financial Education Provision Mapping, 2022

[3] The Centre for Financial Capability polling, 2023

[4] Lusardi, The Stability and Predictive Power of Financial Literacy, 2020

[5] Centre for Social Justice, Survey of 4,000 UK adults, December 2021