FSA Update: FSA consultation paper 15 - promoting public understanding of financial services: a strategy for consumer education

United Kingdom

For the first time, the draft Bill proposes giving the FSA a statutory duty to promote public understanding of the financial system. In their first detailed commentary on this requirement, FSA have explained that they believe that the market for financial services is more complex and less transparent that the market for most other goods and services and that, in order to address this, FSA will provide generic advice and information on retail products in a number of ways:

  • short term methods include running town meetings to promote FSA's role, seeking to ensure that the Millennium programme includes coverage of the importance of financial literacy, and working with the Personal Finance Education Group in order to ensure that an understanding of financial matters is seen as a key life skill in schools and higher education establishments, as well as publishing educational materials such as factsheets and brochures;

  • longer term developments, to include support for consumer advisers at the Citizens Advice Bureau, working in partnership with broadcast media to ensure that financial literacy is given a higher profile, developing a dedicated FSA consumer web site, and attempting to launch a joint initiative with the financial services industry to improve the clarity of information provided and levels of customer service to be expected.

The FSA considers that if all the possible long-term developments were pursued, its ongoing annual costs could rise by £2m to £5m. Therefore, the feedback from the financial services industry on how best FSA can target its resources in this area will be important to ensure that providing basic and general information to improve consumer understanding does not become unduly expensive.