Now is the time to campaign for change in savings culture

McMillan: ‘Cultivate a greater sense of personal financial responsibility’

Money Marketing’s campaign, Pave the Way to Save, was set up under the premise that we desperately need to create a better savings culture in the UK.

As the Government consults on its restructure of financial services regulation and with the coalition still in listening mode, now is the perfect time to lobby for improvements to the regulatory structure.

But changing regulation alone will not bring about the cultural shift that is needed. The industry has to take a look at itself and examine what more can be done to increase consumer engagement and persuade people of the value of decent advice and the need to save for their future and protect themselves and their families.

The introduction of auto-enrolment, the examination of simplified products by the Government and the recently formed Consumer Financial Education Body are all also likely to be influential factors.

As the one area of financial services with its interests completely aligned with the consumer, the IFA community is best positioned to drive forward this debate, with the help of the wider industry and consumer groups.

The campaign began with a call for the new financial regulator, the Consumer Protection and Markets Authority, to have a statutory objective to increase savings and protection rates alongside a list of secondary objectives that fall under its primary aim of ensuring confidence in financial services and markets.

We believe that such a move would create a more balanced regulator and a shift in regulatory focus to ensure policymaking encourages rather than restricts access to decent saving and protection products.

FSA policies have been skewed far too much towards a narrow view of consumer protection, which has been focused on cracking down on misselling at all costs without enough consideration of the dangers to consumers of not saving enough or protecting themselves and their families.

Of course, the regulator must guard against unscrupulous individuals and firms but its lack of a mandate to address the savings and protection gap has led to a regulatory imbalance.

The campaign has already been discussed in Parliament and has won the support of IFAs, providers and consumer groups, although not yet Government ministers, despite being pressed on the matter at the Conservative Party conference.

The campaign will also be looking to facilitate debate about the broader role of Government in encouraging a better savings culture alongside other issues such as debt management. The Government has set up a behavioural insight unit within the Cabinet Office, drawing on the so-called nudge agenda promoted by prime minister David Cameron. We will be asking what more Government can do to cultivate a greater sense of personal financial responsibility.

We will also be looking at the role of advisers and providers and suggestions for better ways to engage with consumers to demonstrate the value of advice. For instance, too many advisers see technology as a threat to their business rather than an opportunity to expand their client offering.

We will be running a series of features and roundtables over the next few weeks and months to explore some of the barriers to saving and to look at how they can be addressed. To get involved with the debate email me at:


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. The first and most urgent thing to do is to restore interest rates paid to depositors to a fair level.

    Keeping down interest charged to borrowers (personal or business)affects only one line of their expenditure.

    The present situation for all savers and pensioners especially virtually eliminates the top line of their savings income.

    The banks are being cynical and opportunistic, denying depositors any interest unless they tie up money for years ahead and increasing their margins in setting interest rates charged to borrowers.

    If the Government really think that any saver will spend a penny that isn’t absolutely essential in this situation, they must be totally mad. This will not get the economy moving.

    Why does no-one advance this?

  2. Love or loathe the FSA, there can be no argument about it directing its resources to apprehending and punishing blatantly bad practice. The trouble is that, as far as the banks are concerned, the FSA is hobbled in this objective by the influence the banks are able to bring to bear on the Treasury. So, until the issue of selective regulation has been addressed, stories of poor selling practices backed up by zero service will continue to blight the public’s confidence in the industry.

    In addition to tackling this issue, the government should be taking steps to make pensions funds and ISA funds 100% free of tax and to removing the shackle of annuity rates from pension funds. Tax concessions are not affordable at the moment, but a declaration of intent for, say, 4 years hence, might well be a good start.

    As for the creation of a “behavioural insight unit within the Cabinet Office”…….for heaven’s sake, why not just ask the IFA community what it thinks?

    There is (IMHO) no magic bullet for persuading consumers of the value of sound financial advice because it cannot be provided for peanuts and too many people simply don’t want to pay. That having said, a few imaginative billboard posters here and there might not go amiss, even if they might have to lean towards the “What would your family do if……..” style of presentation.

  3. Matthew Fleming-Duffy 17th November 2010 at 10:32 am

    Hear, hear!

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