In recent years, customers’ trust in financial services has been severely damaged. Restoring confidence is not an easy task. Alongside reforming how our banks and regulators work, we are taking action to ensure the financial system enables people to access and manage their financial products with confidence and ease.
We are creating a competitive financial services market that will help people to take responsibility for their own finances and plan for the future.
Helping people make more effective use of banking and financial services
- offering consumers the opportunity to access free, unbiased and independent advice about managing their money through the UK’s first Money Advice Service, which is funded by the financial services industry
- giving full support to an industry-led initiative aimed at developing a suite of simple savings and protection products
- making it easier for people to save for their retirement and giving people the choice over how they access their pension savings
- introducing a cap on the cost of payday loans
- making it possible for more people to have access to banking and essential financial services
Improving financial education
We have committed to funding the pilot programme ‘LifeSavers’. Lifesavers is a primary school savings club proposed by the Archbishop of Canterbury’s Task Group on Responsible Credit and Savings. It aims to provide primary school children with good financial habits. Lifesavers will provide education about the benefits of saving with credit unions at an early age. This programme will look at the root cause of money problems, and help future generations to develop good savings habits as early as possible.
Supporting the development of credit unions
In June, we issued a call for evidence, to seek views from interested parties about the future of credit unions. It looked at how we can do more to support the development of the credit union movement in Britain.
In our response we agreed to:
- task the Prudential Regulation Authority and the Financial Conduct Authority to use the evidence gathered by the government in their review of the Credit Union Sourcebook;
- consider legislative amendments that can be taken forward in the next parliament
The Department for Work and Pensions (DWP) has developed the Credit Union Expansion Project (CUEP) which is making an investment of up to £38m in credit unions. It aims to support the credit union sector to provide sustainable financial services for up to one million more people. ABCUL, the main credit union representative body in Britain, won the contract for the project, which is underway.
Making sure that bank and credit card charges are fair and competitive
We’ve introduced reforms to give consumers more power and information about bank and credit card charges. These include:
- new powers for the Financial Conduct Authority (FCA) to require banks to make redress where there has been mis-selling or a legal or regulatory breach
- new procedures for consumers to take group action through the courts
- an agreement with the major personal current account providers to bring in measures to enable customers to better manage their account and to take action to avoid bank charges
Consumer credit and personal insolvency
In December 2010, we published a consultation, ‘A new approach to financial regulation: judgement, focus and stability’ to assess whether consumers and businesses would benefit from consumer credit regulation moving to the new consumer protection and markets authority from the Office of Fair Trading.
Read more about how we are making consumer credit markets fairer.
Financial and banking services for poorer households
The Financial Inclusion Taskforce was set up in 2005 and it completed its work in March 2011. The taskforce completed a review of banking services for poorer households in December 2010.
In November 2011 the former Financial Secretary to the Treasury, Mark Hoban, asked Carol Sergeant to chair an independent steering group, looking into the creation of a suite of financial products that are transparent and easy to understand. Since then, more than 50 organisations have worked to put together a set of recommendations.
In March 2013, the recommendations were published in the final report of the Sergeant Review of Simple Financial Products.