Confused Consumers: Financial Education, Information & Guidance…but what role the

Consumer Scientist?

Martin Coppack

June 2009

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What I’ll cover

• Snapshot of the present situation for consumers

• What is the FSA doing about it?

• How do Consumer Scientists fit into all of this? (A personal viewpoint)

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Financial Phobia – 1/5th of Brits!(Egg, 2003, Cambridge Uni)

Experiences include anxiety, guilt, boredom, and a lack of control with money matters. More extreme symptoms include:

– feeling physically ill

– feeling dizzy

– having a ‘racing heart’ and

– becoming immobilised when faced with

the prospect of managing money

31% would prefer to visit the dentist thanreconcile their statement!

…a psychological syndrome causing avoidance ofengagement with the management of personal finances.

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Some Facts & Figures

• 1 in 10 households do not have a current account.

• 81% pre-retired think state pension will NOT provide standard of living hoped for in retirement. Nevertheless, 37% of these have made NO additional pension provision

• 3 million households in social housing lack contents insurance, but are twice as likely to be burgled.

• Average APR charged by home credit providers is 177%, while loan sharks can charge over 1,000%.

• People on low incomes pay a ‘poverty premium’ of £1,000 a year accessing basic financial services & utilities.

• 57% of over-indebted households had incomes < £7,500 pa

• 2.3 million people use home credit & 600,000 use pawnbrokers.

• 165,000 people use illegal moneylenders at any one time.

(Transact, In Brief: Financial Exclusion, 1997)

                          

Access to appropriate products as well as ability to engage successfully with market

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FSA’s Vision

We share a vision of better informed, educated and more confident citizens, able to take greater responsibility for their financial affairs and play a more active role in the market for financial services.

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What is Financial Capability?

Financial Capability means:• being able to manage money; • keeping track of finances; • planning ahead; • making informed decisions about financial

products; and

• staying up to date about financial matters.

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Information

Regulated advice

Crisis/debtadvice

Overall Strategy

Learning Guidance

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Development and Delivery model

DELIVERING LARGE-SCALE

EMBEDDING TO SUSTAIN

RESEARCH & DEVELOPMENT

PILOTING & IMPROVING

ENGAGING CONSUMERS &

PARTNERS

EVALUATING IMPACT

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Our approach

Learning Money Matters – personal finance education support in secondary schools

Training and support to people working with young adults not in education, employment or training

Training, toolkit and support for students at university

Encouraging further education colleges to take a joined up approach to financial capability

Schools

Young adults

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Our approach

The Parent’s Guide to Money – for all expectant parents

Making the most of your Money – workplace seminars and guide

Working nationally to embed financial capability into the non-profit sector

New Parents

Workplace

Non-profits

What about money? website tailored to 16-24 year olds

Young people’s website

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Our approach

• Money guidance pathfinder• Launched on 14 April 2009 by Chris Pond and Ian

Pearson MP• Test delivery of generic financial advice through:

• face-to-face, • web; and • telephone based money guidance

• North-west and north east of England

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Aspirations and challenges

• Generational change

• Embedded in society

• Work in partnership

• Need to be outcome-focused to enable long term behavioural change

• Reach 10 million people

Find out more at www.fsa.gov.uk/financial_capability

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So what about Consumer Scientists?…

Home Economist

Consumer Scientist

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Have we evolved to something more like this?…

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Or perhaps something like this…

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What is a Consumer Scientist?

For this we need to look to our roots: Home Economics

However…

“Home economists are frequently looking for a definition of their role so that others might understand their

contributions” (Hastrop, 1977)

Hmmm…

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Definition after definition…

“an interdisciplinary study which uses the knowledge and skills from different disciplines to examine matters related to

the home and family” (Mathieson, 1979)

“a study of the interrelationships between the provision of food, clothing, shelter and related services to meet man’s [sic] physical, economic, social and aesthetic needs in the

context of the home” (Jokelainen, 1985)

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From Home Economist to Consumer Scientist

In the UK we have spurned the old professional name although we remain true in many ways to the core mission and definition of the profession of Home Economics

“Consumer scientists measure and interpret consumer needs and preferences, making sure that these are taken into account in the design, production, delivery and use of

products and services” (Scenta website)

Market/Consumer

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So why have I brought this into my presentation on financial capability?

We need professionals now who can act at the interface of the producer and the consumer.

The needs of consumers and the products and information on offer need to be aligned, now more than ever

If we are to bridge the great divide between providers and consumers we need consumer scientists at the heart of all our work:

Across professional roles:

Researchers

Practitoners

Educators

Across sectors:

Finance

Social Services

Food & Housing

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So what does the modern consumer scientist look like…?

We need more Carols

We need more Eleanors

We need more of you all!

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Something like this….