5. Information and Guidance for Retail Customers

Question 1

Is it up to consumers to take responsibility for their own decisions?

Answer 1

Yes, according to the Financial Services and Markets Act (2000).

However, some feel that this is unrealistic due to the COMPLEXITY of many financial products and how difficult it is to explain RISK to a consumer for them to fully understand the decisions they are making.

Question 2

What is meant by ‘financial capability’? (4)

Answer 2

A combination of:
1. Attitude
2. Knowledge
3. Skills
4. Self-efficacy
…which are needed to make and exercise money management decisions that best fit one’s life circumstances.

Question 3

What legal responsibilities do consumers have? (4)

Answer 3

1. Act LAWFULLY and in GOOD FAITH
2. Not make MISREPRESENTATIONS or WITHOLD material information
3. ABIDE by the terms of the CONTRACT
4. Take RESPONSIBILITY for own decisions

Question 4

If a consumer does not understand the advice/product in question, is it their responsibility to tell the provider this?

Answer 4

Yes, unless the financial provider has given unclear or misleading information.

Question 5

What is ‘Caveat Emptor’?

Answer 5

Means ‘let the buyer beware’ i.e. it is the buy’s duty to make sure the information provided is correct and product is suited to them.

This is no longer entirely the case as protective consumer laws have now been put in place, but consumers do still have some responsibility.

Question 6

What responsibilities do consumers have that are not enshrined in law? (2)

Answer 6

1. MANAGING THEIR FINANCES:
   - BUDGETING
   - understand the difference between WANTS AND NEEDS
   - understand the CONSEQUENCES of not paying debt
2. GATHER RELEVANT INFORMATION about products so they can make informed choices
   - read PRODUCT INFO SHEETS
   - ASK QUESTIONS if unsure

Question 7

Is someone doesn’t understand something, are they more or less likely to buy the product?

Answer 7

Less, not understanding tends to make someone suspicious of the product and not want to buy it. This leads to poor customer outcomes.

Question 8

What was the Money Advice Service? What was the strategy that it implemented in 2015?

Answer 8

Predecessor to the Money And Pensions Services (MAPS).

Strategy to bring together EMPLOYERS, CHARITIES, GOVERNMENT & BUSINESSES to collaborate to give people the CONTROL and CONFIDENCE to make the most out of their money.

Question 9

Why was the Money Advice Service strategy deemed necessary? (4)

Answer 9

1. INCREASED LIFE EXPECTANCY
   - long-term provisions need to be made at earlier age.
   -pensions can be complexed.
2. PEOPLE UNABLE TO MANAGE MONEY WELL
   - lots of people lack capability/are confused.
   - struggle with budgeting/don’t feel in control.
3. LACK OF SKILLS & KNOWLEDGE
   - lots unable to grasp simple concepts
   -unable to choose products that meet their needs
4. FOCUSSING TOO MUCH ON CURRENT NEEDS
   - lack of future provisions
   - lack of planning for life events (e.g. birth of child, long term care)
   - lack of emergency funds

Question 10

What is the Money and Pensions Service’s UK Strategy for Financial Wellbeing?

Answer 10

10 YEAR PLAN to increase financial capability, education, info & advice by reaching out to TARGETED GROUPS with PRIORITY NEEDS.

Question 11

What are the five key themes of the UK Strategy for Financial Wellbeing? When does MaPS hope to achieve these by?

Answer 11

Achieve by 2030.

1. Financial Foundations
2. Nation of Savers
3. Credit Counts
4. Better Debt Advice
5. Future Focus

Think: FF, FF, CC, NS, BDA

Question 12

One of the key themes of the UK Strategy for Financial Wellbeing is FINANCIAL FOUNDATIONS.
1. WHO is this targeted at?
2. What is the GOAL it hopes to achieve?
3. If the goal is achieved, what will be the overall OUTCOME?

Answer 12

1. Children, young people and their parents.
2. 2 MILLION MORE children/young people getting a FINANCIAL EDUCATION
3. They become adults who can make the most out of money and pensions

Question 13

One of the key themes of the UK Strategy for Financial Wellbeing is NATION OF SAVERS.
1. WHO is this targeted at?
2. What is the GOAL it hopes to achieve?
3. If the goal is achieved, what will be the overall OUTCOME?

Answer 13

1. Working-aged people who are ‘STRUGGLING/SQUEEZED’.
2. 2 MILLION MORE of these people SAVING REGULARLY.
3. Build EMERGENCY FUNDS and have clear focus

Question 14

One of the key themes of the UK Strategy for Financial Wellbeing is CREDIT COUNTS.
1. WHO is this targeted at?
2. What is the GOAL it hopes to achieve?
3. If the goal is achieved, what will be the overall OUTCOME?

Answer 14

1. Those who often USE CREDIT FOR FOOD/BILLS.
2. 2 MILLION FEWER of these people
3. more people accessing affordable credit & making informed decisions about borrowing

Question 15

One of the key themes of the UK Strategy for Financial Wellbeing is BETTER DEBT ADVICE.
1. WHO is this targeted at?
2. What is the GOAL it hopes to achieve?
3. If the goal is achieved, what will be the overall OUTCOME?

Answer 15

1. Those who need debt advice.
2. 2 MILLION MORE accessing debt advice services
3. receive HIGH QUALITY ADVICE when needed, as a result of:
   - STRONGER, EARLIER ENGAGEMENT
   - FUNDING, SUPPLY & SERVICES which more closely match customer needs

Question 16

One of the key themes of the UK Strategy for Financial Wellbeing is FUTURE FOCUS.
1. WHO is this targeted at?
2. What is the GOAL it hopes to achieve?
3. If the goal is achieved, what will be the overall OUTCOME?

Answer 16

1. ALL ADULTS
2. 5 MILLION MORE engaging with their future/empowered to make more decisions about later life.
3. People engaging and making informed decisions about later life.

Question 17

What is meant by a consumer’s ‘current financial wellbeing’?

Answer 17

Their ability to MEET ALL CURRENT COMMITTMENTS and have the RESILIENCE to COPE with future INCOME/EXPENDITURE SHOCKS.

Question 18

What are the two key behaviours that can help to keep track of and adjust your spending?

Answer 18

1. Budgeting
2. Shopping around

Question 19

Roughly how many people in the UK have problems dealing with their debt?

Answer 19

around 8 million

Question 20

According to the World Bank (within UFA2020 - Universal Financial Access by 2020), financial inclusion is the building block which can be used to achieve which 3 goals?

Answer 20

1. Reducing poverty levels
2. Opportunities for economic growth
3. Ability to participate within the new digital economy

Question 21

What piece of technology does MaPS believe could improve rates of consumer savings?

Answer 21

Auto-enrolment savings schemes, eg payroll or pensions savings.

Question 22

Although technology has helped to improve financial capability through simpler, quicker forms of digital payment, it also comes with some risks. Name two of these.

Answer 22

1. People don’t always fully consider the consequences when making quicker payments.
2. More risks relating to cybercrime

Question 23

How many people in the UK are thought to have less than £100 in savings?

Answer 23

11.5 million

Question 24

How many people in the UK are thought to borrow to pay for their food and bills?

Answer 24

9 million

Question 25

How many people in the UK say they don’t know enough to plan for retirement?

Answer 25

22 million

Question 26

How many children in the UK do not get a meaningful financial education?

Answer 26

5.3 million

Question 27

According to reports carried out in relation to the MaPS UK Strategy for Financial Wellbeing, how many UK adults are in need of debt advice? And how many of these report to have struggled with their mental health within the last 3 years?

Answer 27

5.3 million UK adults, of which 51% have struggled with their mental health within the last 3 years.

Question 28

True or false, those who need debt advice are more likely to have a disability?

Answer 28

True

Question 29

Which part of the UK Strategy for Financial Wellbeing (MaPS) aims to tackle mental health?

Answer 29

Fourth theme - better debt advice, through better delivery of advice.

Question 30

What are the main sources of financial advice and guidance within the UK? (4) Which part of the UK Strategy for Financial Wellbeing do they help to achieve?

Answer 30

1. Money and Pensions Service (MaPS)
2. The Money Advice Trust
3. Citizen’s Advice
4. Step Change Debt Charity

Fourth theme - better debt advice

Question 31

Money and Pensions Advice Service (MaPS) came about in 2019 when which 3 financial advice bodies merged?

Answer 31

1. Money Advice Service
2. The Pensions Advisory Service
3. Pension Wise

Question 32

Which advice service is an “arms-length body sponsored by DWP and which engages with HM Treasury on financial capability and debt advice policy”?

Answer 32

Money and Pensions Service (MaPS)

Question 33

How is the Money and Pensions Service (MaPS) funded?

Answer 33

by the financial service industry and pension schemes.

Question 34

What are the 5 core functions of the Money and Pensions Service (MaPS)?

Answer 34

1. Pensions Guidance
   (workplace and personal)
2. Debt Advice
3. Money Guidance
   (better undertstanding/knowledge)
4. Consumer Protection
   (work with govt & FCA to protect against scams)
5. Strategy
   -(long term systematic change)

Question 35

Which advice service is a charity set up with support of govt, creditors, & the advice sector and aims to “help people across the UK to tackle their debts and manage money with confidence”

Answer 35

The Money Advice Trust

Question 36

What services does The Money Advice Trust offer? (4)

Answer 36

Range of telephone and online advice services which include:

1. National Debtline
2. Business Debtline
3. Common Financial Statement (CFS)
4. Cashflow

Question 37

What is National Debtline?

Answer 37

Phone/Webchat self-help service offered by the Money Advice Trust.

Helps those in debt to speak to creditors to form solutions. Can help with court cases or insolvency options eg bankruptcy, DRO’s IVAs.

Can help with budgeting/improving income.

Advises on rent and mortgages

Question 38

What is Business Debtline?

Answer 38

Free phone / webchat debt advice service for businesses and self-employed people set up by the Money Advice Trust.

Can help with taxes, business rates & support with court action.

Can also help with decisions on whether to recover debt from other people or whether business needs to close

Question 39

What is the Common Financial Statement? What is meant by its ‘Trigger Figures’? What areas are exempt from Trigger Figures?

Answer 39

Standardised budget tool offered by The Money Advice Trust.

Used by CREDITORS to ensure that REPAYMENT OFFERS are FAIR, REASONABLE & SUSTAINABLE.

Not supposed to be available to the public but can be used by debt support services for their casework.

Trigger figures = if you spend over certain amounts in 4 DISCRETIONARY SPENDING AREAS, you need to explain why:

1. Telephone
2. Travel
3. Housekeeping
4. Other

Mortgage and rent payments don’t have trigger figures because they are considered FIXED EXPENDITURE and differ according to circumstances.

Question 40

What is Cashflow?

Answer 40

Free online tool offered by The Money Advice Trust which helps people with Budgeting and how much they can afford to pay towards debt.

Unlike the Common Financial Statement which The Money Advice Trust also offers, Cashflow is aimed at the public and encourages people to handle debt directly with creditors, instead of going through third party help.

People create a budgeting sheet and this gets directly approved by an advisor. The sheet will then get the Standard Financial Statement (SFS) logo on it to show creditors that it has been checked by an official advisor.

Question 41

What is Citizens Advice? What channels do they deliver advice through?

Answer 41

Network of independent charities which offer free confidential advice
- online
- over the phone
- In person

Can help with anything from budgeting to insolvency solutions.

Question 42

What is Step Change Debt Chairty?

Answer 42

Free national TELEPHONE SERVICE.

Also offers a service called DEBT REMEDY - This is an online debt assessment tool which helps to work out budgeting and debt solutions through the use of advisors.

Also plays a key part in policymaking.