1 Tony Hobman s speech to the Financial Capability Forums conference: Financial Capability: The Future, 22 Oct 2010 Thank you John, and thank you all for coming today. I know that both we at CFEB and our very valued partners at Citizens Advice see this event as a great opportunity for us all to learn from each other; for existing forum coordinators and members to share experiences; and for representatives of organisations who might attend forums in the future to know more about them and their work. The forums are a very practical example of how CFEB and our partners can work together nationally and locally. And that s a theme I d like to talk a little more about this morning, touching on our work and our plans, some of the key challenges we face and how partnership working can undoubtedly help us to meet those challenges. Many of you will know all about CFEB, but I will give some background for those who are new to us. We re an independent body set up by Parliament to help people better understand and manage their money.
2 We were established in April under the previous government but with strong cross-party support; and indeed the Coalition has now asked us to launch a national financial advice service and a financial health check by spring of next year. This is very much a transitional year for CFEB as we come to the end of the five-year programme begun at the FSA in 2006, known as Delivering Change ; Ian will tell you more about where we have got to in his workshop and what support is available to you, if you would like to know more. Our immediate priorities for the future are to establish ourselves as a stand-alone body, to learn from and build on all the good work done over the last five years and to develop a new long-term strategy to meet the many exciting and important challenges that lie ahead. With a new chairman on board and a new board in prospect, we are already hard at work preparing for the launch of our national, multi-channel, financial advice service in 2011.
3 And it is of course vital that this service is universally applicable, recognising that people of all ages and from all walks of life can be or can at some point become financially vulnerable and suffer directly from the consequences. A harsh reality that Otto Thoresen well understood following his review of financial capability in the UK. And we mustn t shirk from giving people advice as opposed to simply providing them with information not regulated advice of course, there is a whole industry geared up to providing that but getting close enough to the regulated boundary to ensure that there isn t an advice gap into which consumers fall and which prevents them from taking some kind of positive action as a result. So, as I ve said, this is very much a time of change for CFEB. And I recognise that it s also a time of change for the wider sector of consumer and advice bodies who work in financial capability and financial inclusion. There will be many both inside this room this morning, and outside it too, who will already be reflecting on the impact of the announcements in the Comprehensive Spending Review earlier this week and the public bodies review last week.
4 And I m sure we all understand, only too well, the current financial pressures on both individuals and on society as a whole. For the foreseeable future at least, the demand for free and impartial financial advice is unlikely to diminish. On the supply side, there has been a well-publicised review of the funding and coordination of debt advice and of course we ll wait for more detail as it emerges, including what role we at CFEB may be asked to play in helping to take that very important sector forward in the years ahead. So it s clear that the need to work together effectively where we have shared goals, capabilities and interests is now even greater than ever. Our Regional Delivery teams are represented at all 14 financial capability forums. We have found this helpful for generating a twoway flow of information: getting our messages across to a broad range of agencies; and finding out more about what others are doing and the issues they are facing.
5 For example, in promoting the Money Guidance Pathfinder in the North West and North East, the forums were naturally one of the first ports of call. As well as our work with the Citizens Advice Bureaux, we established strong working relationships with several other agencies as a result of the forums. These included the three biggest housing associations in the North West Great Places, Plus Dane and Riverside; local authorities, notably Blackpool; and benefits advisers from Advice Link. These organisations are referring their staff, customers and tenants to the service, as well as providing a venue for face-to-face sessions. We have followed this up with seminars in the workplace for staff at the local authorities; and Advice Link provides us with volunteer presenters for our seminars. And the forums have acted well as a conduit, not only for information, but also for funding. For example, the Northern Rock Foundation has provided funding to promote FINCAN, the forum in the North East; and the HBOS Foundation is funding the Yorkshire and Humber Forum to develop local partnerships.
6 The work of the forums should also help to inform our plans for an Intelligent Funding Forum nationally. The plans are at an early stage, but we aim for it to provide a strategic overview for funding in financial capability, to avoid duplication and to make sure new projects are even better co-ordinated. The funders will be encouraged to share best practice and present ideas for new areas to fund. I m sure that members of the financial capability forums could contribute to the debate about where the gaps are, and what is needed to have a sustainable effect. I hope these examples provide you with a practical illustration of our aims in funding the forums, and our expectation of just what that funding can achieve. We want to see them grow, and attract a wider range of attendees, so that we all learn from each other; work collectively where that is the best way forward; and ensure that more and more organisations see helping people manage money as part of their work. There is widespread recognition that people s ability to manage money is an important social issue. There are wider social and personal costs of failing to manage money well. We know from
7 research that an increase in financial capability leads to an increase in wellbeing. And there are well reported links between debt and mental ill health. So an important element of our approach is to encourage other organisations and professionals to incorporate financial matters into their work, so they can help the people they work with to manage money well. The national financial advice service will build on the partnership approach we have always used. Reaching people through trusted partners will be crucial to its success. We are now near the end of the procurement process to put in place a UK-wide face-to-face service. And in the meantime we have extended our face-to-face activity in the North West and North East of England and employed direct delivery Money Guides in other parts of the UK. This makes a total of 37 priority areas around the country where the need is greatest. We see forums and their members as a key way to reach into communities in order to help people right across the country.
8 Advice agencies and charities that provide support are a great example of trusted intermediaries that can help us first to reach key groups, and then to help people take action. Of course we recognise that financial services firms, too, have a national reach and a local presence and are naturally turned to for information and advice about finances. And research tells us that employers in general have a trust-based relationship with those who work for them and which can make them an important and effective conduit for our work too. A key component of the national financial advice service will be the financial health check which in turn will provide people with a personal prescription summarising the action they need to take to get their finances into better shape. To encourage people to use this primarily on-line tool, we know that we need to make it as widely available as possible. And so we are actively exploring how to incorporate it into other processes including in the various ways people look for financial information and advice and of course through those third parties that I ve just referred to.
9 We d be delighted to hear more from you about how we can integrate a financial health check into your work; and your thoughts more broadly about how it can help people make financial decisions. If we want people to make better financial decisions, we need to recognise all of the influences that impact on those decisions. Because there are other important factors including access to products; how firms sell products; and how they are regulated. I m aware that members of the forums already contribute to these agendas: promoting financial inclusion, challenging unfair behaviour by firms, and lobbying government and regulators. And so there is also the potential for the forums to feed in issues via our representatives to inform CFEB s work. We also recognise the implications of research which highlights the importance of understanding and working with people s automatic and instinctive responses. So in setting ourselves the challenge of changing behaviour and shaping social norms, we will be harnessing the latest thinking from behavioural economics to
10 refine and develop our products and interventions. The health check is a good example of a behavioural nudge or hook in that context. We ll continue to be rigorous in our evaluation of everything we do, to make sure we accurately assess whether people are taking action as a result of our work, and whether their underlying behaviour is changing over time. All of our work is and will continue to be evaluated for its relevance; its reach; and above all, its impact on end-users. Does it increase awareness, confidence, knowledge and skills; do people actually take action and change behaviour? Does it increase a person s wellbeing? We published a baseline survey in 2006 which has served as the basis for much of our work to date and indeed has become a world standard. CFEB will be undertaking a further survey on at least as large a scale next year, updating it in line with our current needs and remit. I m sure that it, too, will have the same impact on the way we work and that it will also be used effectively by other organisations.
11 We have no illusions about the scale or complexity of the task ahead but we face the future with optimism and confidence. CFEB is and intends to remain at the forefront of rebuilding a culture where better-informed and more confident consumers are able to take greater personal responsibility for their financial affairs and choose products and services that best meet their needs. I hope what has come across in my remarks this morning is just how much we do recognise the value of partnership working, to maximise the reach and impact of our work and to reach people at key stages of their lives. And it is for that reason that CFEB will continue to work with a wide range of trusted intermediaries, organisations and partners in communities across the UK as well as employers, the industry and government, to ensure that those resources at our disposal really are harnessed to maximum effect. The Financial Capability Forums are a demonstrable and much valued example of that approach. Thank you.