The panel included Anthony Browne, Chief Executive of the BBA; Tracey Bleakley, Chief Executive of pfeg, Edward Boyd, Deputy Policy Chair, Centre for Social Justice, Mark Garnier MP, Parliamentary Commission for Banking Standards and House of Commons Treasury Committee and Seyi Obakin, Chief Executive of Centrepoint.
Edward Boyd, Deputy Policy Chair at the Centre for Social Justice, explained that the Centre for Social Justice was set up in 2004 by Iain Duncan Smith to look after the bottom 10% in society. He added that financial education for all young people was certainly part of this wider debate.
Mark Garnier MP said it was important to frame the argument as to where the UK currently stands with regard to financial education and the great success of achieving inclusion in the national curriculum.
People of his generation are still adjusting to the fact that so many transactions are now done online or on plastic with card payments. He said the current generation is almost not familiar with cash transactions.
Tracey Bleakley, Chief Executive of pfeg asked what it now means to have succeeded in getting financial education onto the national curriculum.
Financial calculations in income and expenditure, as well as the difference between credit and debt are all now included in the curriculum.
Bleakley pointed out that a Royal Bank of Scotland survey showed that two thirds of children wanted to discuss money with their parents, but sadly it showed that a third of young people did not want to do this.
“How do we give parents the skills, and how to we make banks able to service and support young people taking their first steps into banking?” she asked, arguing that the UK should have the aim of creating a savings culture, as currently 42% of young people don’t understand the difference between debit and credit.
Bleakley said it was important to prepare young people in banking and financial products so they can go out confidently at 18 and know what to expect. This is a staged process given that online banking is available to them from the age of 11 and they can receive a cheque book at 16. She also noted that young people are able to take out a payday loan from 14 with a guarantor.
Anthony Browne, Chief Executive of the BBA said that the skills of budgeting are crucial and everyone needs these financial capability skills in life.
He continued that the banks have a direct interest in financial education for young people as the banks themselves want intelligent and informed customers who know the difference in products. In this same vein he stressed how important it was for parents to talk to their children about these matters to prevent hardship later in life.
Seyi Obakin, the Chief Executive of Centrepoint said the charity has been working with young people since 1969, and working specifically on financial education for 10 years.
It was noted that 10 years ago less than half of young people coming to Centrepoint for help had access to a bank account. Now 85% have bank account access, which is impressive, but shows there are still 15% who do not.
Obakin said that 80,000 people become homeless every year. The difficulty with opening a bank account is that many don’t have a passport or a utility bill required to provide proof of identity. They often do not have a fixed address if they live in a hostel.
Young homeless people in hostels are therefore prone to use payday lending if they cannot get access to a bank and traditional lending facilities. Obakin highlighted this by adding that 7% of homeless young people admit to using payday lending. Given the national average is between 1.5% - 2% it shows how significant this problem is, and he supported the calls to better regulate the payday-lending sector.
Obakin concluded that resolving the financial education problem for young people was in all of our interests and that we must be in it for the long haul. We need to get young people into employment so they can pay taxes to keep the whole show on the road.