When it comes to retail financial services, there are few developments in the regulatory world that don’t rely on consumers being better able to understand how their finances work. Three cheers then for the FSA for taking its financial capability roadshow to the party conferences. Chris Pond and his team have been working the conference scene remorselessly all week. There are at least two reasons why this can only be a good thing.
First, with an election next year, all political parties are looking for funding cuts. Financial education – which will take years to show any benefits – is a natural target when it comes to swinging the axe. A big message to any politician in Brighton this week, or at the Tory Conference in Manchester next week is look somewhere else! Financial education is not just worthy. It’s vital to the prospects of a healthy retail market which is not constantly being dragged through the mud by frequent mis-selling scandals.
As previous reforms to sales regulation have shown time and again, for any future reforms to be successful, including the RDR, they will need a bit of help in the shape of more informed investors. The retail market cannot rely solely on attempts to fix distribution through yet more rules. At some point, we need to fix the consumers too.
The Regulator would not use quite the same language, but that is what we need to achieve. And the need to build cross-party political support at this time is crucial. Funding for financial education needs to be taken as a given across all three main parties whatever the outcome of the next election.
And the second good reason to taking financial education to the seaside? Judging by the state of our public finances, our politicians could do with a few lessons in finance too.