We’re all justly proud of our National Health Service (NHS) in Britain – has the time come for us to create a National Wealth Service, open to all and free at the point of delivery? The question is timely, given the official launch in January 2019 of the Single Financial Guidance Body (SFGB).
Rolling up the UK’s main state-backed financial guidance bodies into a single organisation that all of us can turn to for help with money matters is an idea that has been circulating for years. Finally, with this year’s Financial Guidance and Claims Act, it is becoming a reality through the merger of the Money Advice Service, the Pensions Advisory Service and Pension Wise.
This is a big moment and – if done right – represents our best chance of helping millions of people overcome a major vulnerability: their lack of basic financial capability. Evidence of their struggles has been piling up for decades. The Organisation for Economic Co-operation and Development’s regular PISA (Programme for International Student Assessment) studies repeatedly show that disturbingly large percentages of people across the developed world are foxed by concepts as basic as unit prices and interest rates. Reports in the UK suggest one in five of us cannot read a bank statement. When so many feel so uncertain in their everyday dealings with the vast financial services sector, is it any wonder that they don’t believe it will treat them fairly?
The solution to this pervasive problem has many strands and will take years to make a meaningful impact. However, there are several reasons for thinking that we are starting from a reasonably promising place.
A good start
First, creating a single, national organisation (albeit with a few differences in Scotland and Wales) should make it much simpler for people to know where to turn. There are too many organisations trying to address this problem today. Many do great work but the landscape is too confusing for most people. ‘Single’ is the crucial word in the new organisation’s unwieldy title.
Its emphasis on guidance is also a big potential plus point, although I have reservations about that term. I hear time and again in conversations about the personal finance market that most people don’t want advice, which they find expensive and hard to understand. What most are after is ‘help’. They want to speak to someone knowledgeable who can help them understand their choices and the issues they need to watch out for. This help needs to be delivered in plain English by people who have their best interests at heart and are not trying to sell them anything. If the new organisation could manage the same blend of expertise and empathy we see from all those medical staff on TV shows such as 24 Hours in A&E
, it would be well on the way to success.
To succeed on that scale, however, it will have to become much better known than any of its predecessor organisations. Here, again, there are helpful and encouraging precedents. The Current Account Switching Service run by Bacs has lifted public awareness from less than 60% in late 2013 to 80% in 2018 for its service, which, like the SFGB, is aimed at a very broad UK audience. Its success was partly thanks to excellent creative advertising, including ‘Switch Guarantee Guy’, and partly because it adopted a partnership model with the banks, who are members of Bacs, placing its branding on many of their communications and greatly amplifying its reach. The SFGB will be funded by a levy on financial services companies and needs to piggyback on their communications in the same way.
Finally, the SFGB will require explicit backing and endorsement from the government to validate it as authoritative, independent of the financial services sector and trustworthy. If it is to succeed, ministers must not just enable it – they must champion it and remain engaged in its agenda to ensure the focus is broad and ambitious enough, from developing proven financial education programmes for schoolchildren and young adults to supporting people to save, escape problem debt and manage their money through retirement.
More responsibility for our own financial well-being has been passed down to each of us over recent decades. Many are ill-equipped to shoulder those risks. Making a success of the SFGB could improve the lives of millions in this country who suffer chronic stress and insecurity due to poor financial capability and understanding, and who routinely pay over the odds for essential services. And although the National Wealth Service might be a fanciful name for this new organisation, its architects should approach their task with the same ambition that 70 years ago inspired the creation of Britain’s NHS. The nation’s financial well-being deserves nothing less.
The original version of this article appears in the Q4 2018 print edition of The Review. All members, excluding student members, are eligible to receive the quarterly print edition of the magazine. Members can opt in to receive the print edition by logging in to MyCISI, clicking on My account, then clicking the Communications tab and selecting ‘Yes’.
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