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McCarthy says innumeracy is widening the gap

FSA chairman Callum McCarthy has admitted that illiteracy and innumeracy of swathes of the population will hamper attempts to close the savings gap.

Speaking at the Alliance for Finance conference, McCarthy said 23 per cent of the UK’s adult population could not, if presented with a copy of the Yellow Pages, find the name of a plumber. He added that 20 per cent, if offered the choice of 30 or 10 per cent of 350, opted for 30.

McCarthy says the problem is becoming particularly acute as individuals are increasingly being required to take responsibility for financial product purchases and fund choices.

He concedes that the FSA’s 8m education budget for the 2005/06 tax year, which has doubled in each of the last two years, will struggle to scratch the surface.

When compared with the Government’s 22bn education budget and the industry’s 1.4bn annual marketing spend, the scale of the problem is evident.

McCarthy says: “The awareness of finance among those who do or could use those financial products or services in no way matches the complexity and sophistication of what is on offer. The challenge for the FSA is to identify where our efforts have most effect and our expenditure most leverage.”

Roberts Clark director Ashley Clark says: “The education system does not fail most people but sadly we have some illiterate and innumerate people in this country. However, probably 90 per cent of the population is financially illiterate and the Government should start educating people from the age of four.”

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