Schedule 1

Part of Financial Services Bill – in a Public Bill Committee at 2:15 pm on 7 January 2010.

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Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury) 2:15, 7 January 2010

I beg to move amendment 48, in schedule 1, page 54, line 32, at end insert—

‘(d) the quantitative and qualitative measures it will use to determine whether it has met its objectives.’.

This morning we discussed how we measure or evaluate the performance of the consumer financial education body. The hon. Member for South Derbyshire talked about the Treasury Committee evidence session with the FSA, at which he probed the people from the FSA about how they calculated some of the measures of success that they had used in evaluating financial education. The example he gave was that when they talked about the number of schoolchildren they had reached, it turned out to be the number of schools to which they had sent packs multiplied by the number of pupils at those schools. He suggested that the information they sent may have been put in the bin or left lying on the shelf—there was no guarantee that, having sent the information to all those schools, it would have been read, digested and used in lessons. The risk is that the focus is on input and process rather than on outcomes.

The hon. Gentleman not only raised the topic at the Treasury Committee but also expanded on it at our Committee’s evidence session. The FSA, in its additional memorandum to the Committee, talked about how it assesses or evaluates the impact of the financial capability work. Four main areas were referred to, namely reach, content, process and impact:

“Reach—the number of people reached by a programme...Content—satisfaction with, and quality of, the information and guidance received...Process—appropriateness and efficiency of the intervention; and...Impact—the intention to act and/or the actions that have been taken.”

Going back to the hon. Gentleman’s example of packs being sent to schools, the FSA would have achieved a great deal in terms of reach, and the content box may well have been ticked—there may have been a good standard of content—but I am not so sure about process and, certainly, there would have been very little impact if the information packs had all ended up in the bin. We need to make sure that there is good evaluation of the work done by the consumer financial education body, so that it can demonstrate progress—ultimately, I suppose, against the baseline study of 2006. People could then see a demonstrable level of progress. It is important to make sure that the right sorts of measures are being made of its success.

The appendix of the supplementary memorandum submitted to the Committee looks at various activities that the FSA has undertaken as part of its consumer education programme, and gives some measurements relating to what people have done as a consequence. Thus as a result of the “Parent’s Guide to Money”, which I suspect is the publication given to expectant mothers, 43 per cent. of people took action, rising to over half of people on low incomes; 67 per cent. reviewed their monthly spend and income. Some 91 per cent. of those involved in workplace seminars reported that the seminar made them better at finding financial information, and 87 per cent. reported that it had made them better at comparing prices.

The measurement made of the “Learning Money Matters” pack for schools, delivered through the Personal Finance Education Group, is as follows:

“The majority of teachers are very satisfied with the support provided by pfeg consultants”.

That sounds good, although it does not necessarily lead to actions that young people might take to manage their money. The evaluation continues:

“Involvement in Learning Money Matters often acts as a catalyst to encourage teachers to initiate or expand the teaching of Personal Finance Education in their schools.”

“Money Doctors”, the higher education programme, is making sure that it reaches out to students. Interestingly, that demonstrated some success, in that after attending the seminar, students were more likely to check their balance before withdrawing cash. The 50 per cent. of

“students who had not attended a session reported that they were constantly or usually overdrawn on their main bank account,” but

“this dropped to 40 per cent. for those students that had been to a session.”

That sounds like a bit of progress.

My point is that we need to ensure that there are good measures available to help us evaluate the work that the consumer financial education body does, and the measures should be transparent.

Amendment 48 adds to paragraph 8(4) of schedule 1 a requirement that

“the quantitative and qualitative measures it” that is, the CFEB—

“will use to determine whether it has met its objectives” be set out in the annual plan that the CFEB publishes, so that we can see clearly not only the objectives and their relative priority, and the allocation of resources between the objectives, but the measures that will be used to determine whether they have been met. I recognise that some of the measures are long term. Some 97 per cent. of people might become more aware of financial matters and might find out financial information now, but what proportion of people will use that to improve their pension provision, for example, in 10 or 15 years’ time? How do we track the long-term benefits of what they have done?

Simply ensuring that people are more comfortable finding financial information might not lead to the step change that we want in people’s preparedness for retirement, or ability to withstand a shock to their income or unexpected expenses. The real measure of success is whether it actually changes people’s outcomes. Are they better off as a consequence of being given financial education? As well as setting out its objectives, it is important that the consumer financial education body tells us in its annual plan how it will achieve and measure those objectives. That will give people more confidence in its work, and will increase transparency in measuring how successful it has been. Given the significant sums of public and private money that the body will benefit from over the years, it is important that there is proper discipline, so that we know exactly what it is doing and how well it is doing it.