Wealth & assets

Financial capability

Cara Brown
Cara Brown

This briefing, published in partnership with Transact, explains financial capability and outlines key developments and key policy themes in this area.

Key findings

  • The briefing explains that the term ‘financial capability’ was recently defined by the Treasury as: ‘a broad concept, encompassing people’s knowledge and skills to understand their own financial circumstances, along with the motivation to take action’ and that the emergence of financial capability as a policy issue has ‘mirrored the growing complexity of the financial services market’ increasing personal responsibility placed on people to manage their finances and emergence of a ‘live for today, pay later’ culture.
  • The Government, the FSA and other agencies are playing a stronger role in promoting financial capability, reflecting growing concern and policy interest in the issue. The financial services industry also plays a prominent role by funding the FSA’s work, supporting the Personal Finance Education Group and promoting a range of financial capability initiatives.
  • In terms of key policy themes, the National Strategy for Financial Capability and other efforts to improve financial capability have tended to focus on the linked themes of financial education, information and advice. The need to improve financial capability is also closely linked to pension reform and financial exclusion.

Further reading

Perfectly adequate?
Revisiting pensions adequacy 20 years after the Pensions Commission
·
Molly Broome, Ian Mulheirn
Calculating a Living Pension: the 2024 update
·
Molly Broome
Wealth check
What the new Government needs to know about household wealth as it navigates the challenges ahead
·
Simon Pittaway
Cara Brown
Cara Brown Former External Affairs Manager