Fortnightly financial #45 Carol Knight

Can you tell our readers more about TISA and who you represent?

TISA is a not-for-profit membership organisation and a trusted partner of key industry stakeholders in helping shape the future of the UK financial services sector and the environment in which we operate.

The cost-of-living crisis has resulted in economic instability causing a significant increase in the number of people struggling to meet bills, which can lead to financial distress and have a detrimental impact on work productivity and economic growth. We are committed to improving the financial wellbeing of UK consumers by working collectively with the financial services industry. We care about the entire financial life of consumers: from their first savings account opened to ensuring people can age and retire with dignity. TISA believes that savings and investments play a significant role in the lives of people and small businesses. Consumers benefit when they put aside money for their future. Saving and investing provide a buffer for emergencies; help people achieve big and small goals throughout their lifetime; and give people quality of life in later years. 

TISA supports the aims of, and would like to work with, all political parties that look to increase economic growth and prosperity. Our proposals seek to support this aim by improving financial literacy, reaching underserved members of society and incentivising innovation.

At FSCS we believe financial education is an important part of reducing harm suffered by consumers. What part does this play in the work that you do and what improvements would you like to see to financial education in the UK?

Through our Financial Education Council (FEC), a Sub-Committee of TISA comprising leading industry participants, we lead initiatives aimed at improving the provision of financial education, from primary school to young adulthood and beyond.

It has been a decade since financial education was incorporated into the National Curriculum for Secondary Schools in England; however, its implementation remains inconsistent, and its impact has been limited. According to new research from Santander UK, only one in four young adults report having received any financial education in school. To foster a more productive economy and promote the financial and mental wellbeing of our society, it is imperative that financial education be made compulsory in all schools in England, starting from primary school. Research shows that most people's money habits are formed by the age of seven, and once these habits are established, it is difficult to change them later in life. Additionally, 1% of primary teachers believe their pupils possess adequate financial skills, while 84% of 6-18-year olds express a desire for more financial education in schools.

The FEC wrote a letter to the Prime Minister last October, calling for the inclusion of financial education as a compulsory subject in all schools. The open letter has been signed by over 50 organisations, including some of Britain’s best-known companies. TISA also responded to the Department for Education’s Call for Evidence on the Curriculum and Assessment Review last November, recommending that financial education become a statutory requirement of the national curriculum, with appropriate resources, support, and focus.

The need for financial education though continues through adulthood.  Starting at the point of entering the workplace, TISA also offers an Essentials of Money Management training course, which is designed to provide workforces and wider communities with comprehensive financial literacy and support their journey to financial wellbeing. Continuing through adulthood, TISA has worked for many years with the FCA and HMT to improve the guidance/advice regime. We are now highly supportive of the proposed targeted support approach which will give all people access to better, tailored information to help them make better financial decisions. We are looking forward to seeing the impact these changes have.

Aside from improving people’s basic financial literacy, what do you see are the other key ways to improve the nation’s approach to pensions and long-term saving?

Auto Enrolment has created a mass market of largely unengaged pension savers. Engagement is key and initiatives such as the Pension Dashboards and the proposed Targeted Support regime will play an important part in driving up levels of understanding, trust and confidence. However, we need to also acknowledge that there will always be a significant proportion of enrolled savers who will not engage until they have to. As such, it is important that we have robust defaults in place and the framework provides the appropriate protections and opportunities. The forthcoming Value for Money regime is an excellent example of how we can progress the DC pensions landscape through a consumer-focused approach. We also need to recognise currently underserved groups and consider ways to level things up. The self-employed being one example where active pension participation stands at around 20% - the Lifetime ISA provides an alternative to a pension as a retirement savings vehicle for this group but changes to improve accessibility and penalty free withdrawal flexibility are needed. The recently announced Call for Evidence provides an opportunity for change in this area. We also support NEST Insights with their self-employed retirement savings trials.

There is also considerable pipeline change coming through for DC pensions with scale and consolidation placed firmly at its centre. The sequencing of the various strands will be crucial to ensure these are complimentary and where conflicts or overlap occurs, these can be managed. We are generally supportive of a more consolidated DC pensions market, however it is crucial that this is approached and implemented in the right way. We continue to support the regulators and government bodies in achieving their objectives of economic growth and consolidation with a firm focus placed on good consumer outcomes.

And what other priority areas are you focusing on in the next few months?

Improving inclusive economic growth through initiatives that increase access to savings and investments and ensuring people can get the right support at the right time. Initiatives include:

• Supporting the FCA bringing in a Targeted Support regime. This is an initiative we have been working on with our members and Government bodies for several years;
• The new Consumer Composite Investments (CCIs) regime and overhauling consumer disclosures;
• TISA’s inclusive investing campaign.

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?

Our recent work on studying the propensity of people to save in cash even for the long term provided us with clear insights into the sectors of our society who are least inclined to invest their savings.  We were able to identify some reasons why, and this resulted in recommending changes to the risk wordings which are required for all investment products.  But this will not be the only reason why people are reluctant to invest so I would spend this money undertaking additional research to identify other actions we can take to help people gain confidence in taking the actions which will make their money work harder for them.

Thanks for sharing your thoughts with us, Carol.

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.