HM Treasury

Financial services

Financial Capability

As financial products become more sophisticated, and the pace of economic, social and demographic change increases, it becomes more important for consumers to engage with financial services with skill and assurance. However, the Financial Services Authority (FSA) has identified low levels of financial capability across the UK, especially among young people. There are, in particular, widespread weaknesses in planning ahead and choosing financial products.

Financial capability is a broad concept, encompassing people's knowledge and skills to understand their own financial circumstances, along with the motivation to take action. Financially capable consumers plan ahead, find and use information, know when to seek advice and can understand and act on this advice, leading to greater participation in the financial services market.

With additional Child Trust Fund (CTF) payments to 7-year-olds from 2009, and the implementation of personal accounts for pension saving from 2012, the Government has new opportunities to promote greater capability across the life cycle.

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