Memorandum submitted by the Financial
Services Authority
1. This memorandum is submitted by the Financial
Services Authority in the context of the Committee's Inquiry into
Unclaimed Assets within the Financial System. We are responding
specifically on:
— Whether the use of unclaimed assets
should be limited to certain aims, bodies or localities; and
— How the use of unclaimed assets might
promote financial inclusion.
2. We welcomed the Government's statement in
the Pre-Budget Report (PBR) in November 2005 that unclaimed assets
should be reinvested in the community, focusing on youth services,
financial education and financial inclusion. The National Strategy
for Financial Capability ("the National Strategy"),
led by the FSA, targets those areas, among others, as part of
an overall programme designed to raise the financial capability
of millions of UK citizens. We believe that there is a strong
case for directing some of the funds from unclaimed assets towards
the extension of financial capability work.
3. The National Strategy is a partnership between
the FSA, the Government, the financial services industry, consumer
groups, community and voluntary organisations and trades unions.
Together, we must achieve a step change in financial capability
if we are to prevent serious consequences in the future. Financial
capability is an increasingly important life skill, with consumers
needing to take much greater personal responsibility for managing
their financial affairs. The ability of consumers to do so has
thus become essential in enabling people to participate in society.
4. The programme to deliver this involves a
sustained and wide-ranging set of initiatives, the result of extensive
piloting and ongoing evaluation. Based on the outcome of the largest
study into financial capability undertaken anywhere in the world,
it targets areas of most need and where there is an opportunity
to improve people's financial skills over the long-term. The programme,
which will reach over 10 million people in the period to 2011,
targets, among others, schools, young adults, employees in the
workplace and new parents. We also have initiatives aimed at harder
to reach groups, such as young adults not in education, employment
or training and people with particular needs, such as cancer sufferers,
residents in social housing and prisoners and ex-offenders.
5. A key element of our approach is working
with intermediaries, often at local level, who are able to reach
people in their community and who understand the best ways to
meet their clients" money and other needs. We intend to expand
both the number of intermediaries who are currently involved in
improving the financial capability of their clients and the scope
of their work.
6. Much has been achieved so far and we expect
demand for support to help people manage their finances to increase
as more people become aware of the positive impact which this
work is achieving. Additional funding would enable the scale and
reach of delivery through intermediaries to be extended further
and help many more people to improve their ability to manage their
personal finances. Funds from unclaimed assets could be used to
increase capacity with intermediaries—for example, further
staff numbers or training to help them work with clients—and
could also potentially be used to help finance the provision of
generic financial advice (there is a potential link here with
the Government's recently-announced project to examine how generic
financial advice could be delivered to more people).
7. We accordingly invite the Committee to consider
recommending that part of the funds from unclaimed assets should
be used to help improve the financial capability of UK citizens.
The FSA stands ready to help advise on how any such funds should
be allocated.
February 2007
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