UK’s Financial Services Authority Names Financial Capability Steering Group Members

The FSA has announced the members of the new Financial Capability Steering Group (“Steering Group”) which, under the FSA’s leadership, will develop and implement a national strategy for financial capability. The objective will be to provide consumers with the education, information and generic advice needed to make their financial decisions with confidence. The Steering Group comprises senior people from government, firms, employers and trade associations, not-for-profit organisations, consumers and the media.

The Steering Group members are:

• John Tiner, Chief Executive, Financial Services Authority (Chairman)
• Luqman Arnold, Chief Executive, Abbey National plc;
• David Clementi, Chairman, Prudential plc;
• John Gummer, Chairman, Association of Independent Financial Advisers;
• David Harker, Chief Executive, Citizen’s Advice;
• Deirdre Hutton, Chair, National Consumer Council;
• Digby Jones, Director General, Confederation of British Industry;
• Ruth Kelly, Financial Secretary to the Treasury; and
• Ron Sandler, Chairman, Personal Finance Education Group
• Media figure to be announced shortly

The establishment of the Steering Group marks the second phase of the FSA's public awareness work and, later this month, it will publish a paper setting out the thinking that has led it to adopt this approach. It first set out its aspirations on consumer education proposals in November 1998. Since then, from a standing start, the regulator has increased year on year the scale, range and topicality of its public awareness work. It has fostered initiatives on financial literacy (including in the educational system) and provided independent information and guidance to consumers through a variety of channels, both directly and in collaboration with others.

However, the FSA's experience (and that of others) has shown that much more needs to be done. There is a need to engage more and with a much wider range of organisations, so as to make the most of each other’s contributions, knowledge and experience. Discussions with a range of stakeholders and potential partners have found widespread agreement that there is currently a lack of a UK strategy to improve financial capability, that this gap should be filled and that all would like to see the FSA take on a leadership role.

The FSA has also increasingly come to see the interdependence between its regulatory measures for consumer protection and its public awareness work. The effectiveness of the information and advice delivered to consumers by firms is critically dependent not only on the quality of the information for its purpose but also on the capacity of the consumer to understand and to benefit from it at the time and place of its delivery. Consumer understanding and awareness influence directly both the nature and the intensity of the regulation needed for consumer protection and also whether consumers derive benefit from competition in the market place.

John Tiner, FSA, Chief Executive, said: “Achieving a step-change in the level of financial capability is critical to ensuring that consumers are financially aware, can take responsibility for their financial affairs, and are able to influence the market. All agree that there is a great deal to be done but, currently, there is a lot of separate activities and a leadership vacuum. This is where the Steering Group comes in.

“With a strong Group setting strategy and overseeing its implementation we can ensure a more co-ordinated approach to raising standards of financial understanding. I believe this will lead to better value for money and will have a far greater impact on financial capability.

"At this stage, we have not set out to offer detailed measures. Our purpose is to offer for comment the main elements on which a strategy could be built if those concerned agree. Our statutory objective of promoting public understanding of the financial system, together with the ability to raise finance from the industry for this purpose, gives us a clear remit to lead this work.

"I would stress, however, that that this is not about centralisation, but about a co-ordinated and targeted approach, getting better value for the money currently spent, drawing in new money and implementing with a high degree of flexibility and autonomy. The FSA will have a part to play, in addition to its leadership role, but so will all those who are currently working in the field. We hope new players will join under the strategic umbrella."

The FSA Board will retain accountability for the FSA’s objective of improving public understanding of the financial system. The FSA, advised by the Steering Group, will publish the strategy by the end of March 2004. In addition to the Steering Group there will be a Working Group chaired by Anna Bradley, FSA’s Consumer Director. This Working Group will consist of similar stakeholder organisations to those represented on the Steering Group and will be charged with implementing the strategy.

Background

1. Luqman Arnold is Chief Executive of Abbey National plc. He was previously President of the bank UBS AG. David Clementi is Chairman of Prudential plc. Before joining Prudential, he was Deputy Governor of the Bank of England for five years.

   Rt Hon John Gummer is Chairman of the Association of Independent Financial Advisers. He has been an MP for 24 years and was Secretary of State for the Environment in the last Conservative government.

   David Harker is Chief Executive of the National Association of Citizens Advice Bureaux. David is a member of the NHS Modernisation Board and is a member of the Chancellor’s Standing Committee on the Euro.

   Deirdre Hutton, CBE, is Chairman of the National Consumer Council. Deidre is also a Non-Executive Director of the FSA.

   Digby Jones is director-general of the Confederation of British Industry. He is a member of the Advisory Board of the Commonwealth Education Fund and the National Learning and Skills Council.

   Ruth Kelly MP is Financial Secretary to the Treasury. She has been the MP for Bolton West since 1 May 1997.

   Ron Sandler is Chairman of The Personal Finance Education Group. He recently led the Government review into the long-term retail savings industry in the UK.

2. Earlier this year, John Tiner set out the high-level outcomes related to the FSA's regulation of the retail financial services market. Developing the public's financial capability is a central plank in achieving those outcomes, which are as follows:
   • Consumers’ needs are well understood by themselves, firms and the FSA;
   • Consumers are financially aware, can take responsibility for their financial affairs, and (as a group) are able to influence the market;
   • An economically sustainable distribution system that operates to standards that provide appropriate levels of advice and disclosure tailored to the needs of the consumer and complexity of the product;
   • There is a choice of competitively priced products suitable to meet the financial needs of all types of consumer;

     and Coherent and proportionate regulatory requirements are aligned to the risk of consumer detriment.

3. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime.
4. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.