Nikhil Rathi, chief executive of the Financial Conduct Authority, said the UK needs to tackle the “root causes of financial exclusion”, citing a recent report by the Education Select Committee of MPs
The head of Britain’s financial watchdog has called for better financial education in schools, warning UK economic growth faces an “uphill battle” without it.
Addressing a gap in economic understanding, Mr Nikhil Rathi, who leads the Financial Conduct Authority, brought attention to the “root causes of financial exclusion”, referencing insights from a recent report by MPs on the Education Select Committee. He said: “Effective financial education needs to begin early. Potentially even at primary level, as the select committee called for, and should now be considered in the Government’s curriculum review.”
During his speech at a Stepchange event this Thursday, attended by figures from regulatory bodies such as Ofgem, local government representatives, and consumer finance firms, Mr. Rathi insisted that corporations, along with the FCA and other public entities, carry the responsibility to bolster financial inclusion for those of working age, particularly in light of increasing digital finance products.
He suggested that enhancing digital financial accessibility for all could counteract barriers and potentially spur economic growth. Mr Rathi proclaimed the need for a “fundamental change of mindset” within the regulatory body, the Government, and financial service companies to ensure people have entry to crucial services like digital loans and savings products.
He said: “It’s about access to what you need to live your life.” Mr Rathi highlighted recent trials of auto-enrolled workplace savings schemes, similar to pensions, where employers deduct the amount workers want to save directly from their payroll unless the employee opts out.
The National Employment Savings Trust (Nest), which has run the trials, said the schemes were popular with 93% of those surveyed during the trials. He stated: “With an estimated one in three working age people not having access to £1,000 of cash savings to help with unexpected life events, this could be a game changer.”
Furthermore, Mr Rathi continued, the financial advice and guidance market in the UK “does not work well”. He added: “Working with Government, it is our hope to reform the system so consumers get the help they want, when they need it, and at an affordable cost. This could improve support for making pension decisions or choices with long-term savings and investments.
”At the same event, Financial Ombudsman Service chief executive Abby Thomas urged businesses to step up support for people in debt. In the first three months of this financial year, complaints rose by 70% versus 2023, she said, with 18,000 credit card cases, of which 15,000 related to irresponsible or unaffordable lending.
Ms Thomas said the volume of complaints is “concerning” and that lenders must treat customers “fairly and with empathy”. She said: “There are so many well-established rules and guidelines – including most recently in the consumer duty – that are designed specifically to help financial businesses find ways of supporting their customers when the need arises. “But despite this, we’re still seeing cases where customer experience has fallen far short of what it should have been.
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