Memorandum submitted by Personal Finance
Education Group (pfeg)
FINANCIAL EDUCATION
AND ACCESS
TO FINANCIAL
ADVICE
The need to start financial education in schools
1. Schools are unique in having access to,
and influence on, all young people across social, economic, ethnic
and religious groups. If we can ensure that young people leave
school as informed and independent consumers with the confidence
to engage with the finance sector, this will provide a firm foundation
and prevent many of them from getting into financial difficulties
as adults. This will need to be funded. Government departments
have indicated that it is unlikely to come through the Department
for Education and Skills. There is a case for investment from
the financial services sector.
FINANCIAL EDUCATION
AND ITS
LINK WITH
INCLUSION
2. Financial capability is a prerequisite
to full participation in modern society. All young people need
the skills, confidence and knowledge around financial matters
regardless of their background or their learning ability. Young
people are interested in money matters and understand its relevance
to their lives. Taught well it can reach all sections of society
even those who may currently feel disaffected and disengaged with
school.
FINANCIAL EDUCATION
IN SCHOOLS
3. At present there is no guarantee that
young people will receive quality financial education. Although
there are opportunities emerging out of changes in the curriculum,
for example, the advent of functional mathematics and other initiatives
such as the Child Trust Fund, there is still no statutory requirement
to teach personal finance education.
PFEG'S
ROLE IN
FINANCIAL EDUCATION
4. pfeg is the key element in the Schools'
strand of the FSA's national strategy. It provides a comprehensive
service to support schools and has developed tried and tested
approaches to raise the quality and quantity of personal finance
education for children and young people.
INTRODUCTION
5. pfeg is a registered charity, working
across the UK. It is widely recognised as a leading force in the
delivery of personal finance education within schools and receives
cross sector support from business, FSA, Government and the educational
establishment.
6. Its mission is for all young people to
leave school with the confidence, skills and knowledge they need
in financial matters so they can take part fully in society. pfeg
takes the view that all young people, regardless of their socio-economic
or cultural background or their learning ability, need to be financially
capable.
7. pfeg has played a key role in the Schools
Project strand of the FSA's national strategy on financial capability.
PFEG'S
ROLE IN
PROMOTING AND
SUPPORTING IMPROVED
FINANCIAL EDUCATION
IN SCHOOLS
8. pfeg seeks to provide a comprehensive
service to schools to support senior management and classroom
teachers to deliver high quality personal finance education. Through
its website, www.pfeg.org, it has provided access free of charge
to a wide range of engaging and innovative materials, guidance
and signposting. Its approach to teaching personal finance education,
developed through its innovative pilot Excellence and Access has
been accepted as the most effective way to ensure that young people
become financially capable. This approach entails working with
schools to embed personal finance across a range of curriculum
subjects such as personal, social and health education, citizenship,
mathematics and work related learning.
9. pfeg has been tasked by the FSA's Financial
Capability Steering Group to provide specialist support to teachers
in England. This will provide a template for action which can
be followed in other jurisdictions and generate content that can
be used across the UK. At present a business case in being put
together to raise the necessary funding for a five year project
that would achieve, over time, a step change in the nation's financial
capability.
10. pfeg has conducted ground breaking work
with schools in promoting an inclusion agenda. Examples include:
— Production of a pack of 3 case studies
demonstrating different cultural experiences of personal finance;
— Project with up to 300 young people
and 60 teachers based in Pupil Referral units;
— Case studies and teaching resource
for children with special educational needs;
— Cultural diversity bulletins to share
good practice and provide ideas for classroom activities
THE CASE
FOR STARTING
FINANCIAL EDUCATION
IN SCHOOLS
11. The statutory education system is one
of the most important places to start addressing the problem of
low financial capability. If we can improve school leavers' levels
of financial capability they will have a firm foundation for future
progress. Starting financial education in schools will equip young
people with the knowledge, confidence and skills they need before
it is too late. Schools also have a captive audience and can thus
guarantee broad coverage of an entire age group.
LINK WITH
THE INCLUSION
AGENDA
12. Financial capability is a prerequisite
to full participation in modern society
13. If young people were to receive high
quality personal finance education it would help them build their
confidence in financial matters and help with their employability.
It may help reduce to number of young people not in employment,
education and training (9.6% of young people were in this category
in 2004).
14. Financial issues are a large contributor
to the non-completion of university. The Higher Education Statistical
Agency predicted that 14.4% of full time students who started
their degrees in 2002 would not complete their courses. The effect
of not being financially literate is disproportional on different
social groups. Money problems and fear of running into debt are
among the chief reasons that young people from disadvantaged families
are more likely to drop out of university than other students.
CURRENT SITUATION
IN SCHOOLS
15. Education is a devolved function of
government. This submission focuses on England which has over
80% of schools in the UK.
16. Currently, personal finance education,
if it happens at all, has a low status. It cannot be assumed to
be happening in any given school at any time. The voluntary nature
of financial education informs the approach needed by organizations,
such as pfeg and the FSA, which aim to support both schools and
teachers in developing this area further. Such support is very
much a matter of influence and persuasion, not diktat.
17. New opportunities are emerging. Personal
finance education will continue to be part of personal, social
and health education and citizenship and to underpin enterprise
education. In addition the Department for Education and Skills
has asked the Qualifications and Curriculum Authority to consider
including financial capability more explicitly in the mathematics
curriculum. Examples from personal finance management are one
context in which functional mathematics can be taught—there
will be initial access to accreditation of functional mathematics
schemes through the new diplomas in 2008. The Child Trust Fund
provides a useful hook to link into personal finance education,
not only for the recipients but also for those about to leave
school who will become parents before too many years have passed.
18. pfeg has a clear understanding of how
to support schools and how to encourage them to raise the quality
and quantity of personal finance education provided. FSA research
published in May 2004 reported that two thirds of people said
that if they had learned more about financial matters at school
they would be more confident about dealing with their personal
finances. This belief was similar across those with different
experiences of personal finance in school and across social classes.
Young people themselves want to learn about money management as
they can understand the relevance. Teaching personal finance in
an engaging and interactive way is an excellent means of reaching
those pupils who may be disaffected in schools, in particular
under achieving boys.
INVESTMENT BY
THE FINANCE
SECTOR
19. pfeg receives financial support from
a number of sources although, in common with most charities, it
has no guaranteed income. Although it is relatively easy to attract
funding for modest projects that are discrete, branded and time
limited, it has proved difficult to acquire the necessary funding
to achieve the step change identified by the FSA's national strategy.
Reaching all those of school age will mean that the number of
informed and independent consumers will be increased by those
who had previously been excluded from financial services. The
result would be that, as adults, they would buy, not only more
sensibly, but also more financial products and services. Investing
in education at an early stage by the financial sector should
be encouraged.
20. GOVERNMENT
SUPPORT
Although pfeg's work is supported by the Department
for Education and Skills and has been publicly acknowledged and
valued by the Treasury and the Department for Work and Pensions,
there has been no indication that this would result in funding
to support the work in schools necessary to achieve a step change
in the financial capability of the next generation.
January 2006
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