Policy paper

2010 to 2015 government policy: access to financial services

Updated 8 May 2015

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

This is a copy of a document that stated a policy of the 2010 to 2015 Conservative and Liberal Democrat coalition government. The previous URL of this page was https://www.gov.uk/government/policies/making-it-easier-for-people-to-access-and-use-financial-services. Current policies can be found at the GOV.UK policies list.

Issue

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.

Actions

Helping people make more effective use of banking and financial services

We are:

• 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

Background

Consumer credit and personal insolvency

HM Treasury and the Department for Business, Innovation and Skills launched the consumer credit and personal insolvency review in October 2010. We issued our response in November 2011.

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.

Simple products

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.

Appendix 1: simple products

This was a supporting detail page of the main policy document.

We set up a steering group in November 2011, chaired by Carol Sergeant, to devise a suite of simple financial products – products that are transparent and easy to understand. By doing this, we are helping more people to take responsibility for their finances and make better choices.

Over 50 organisations have worked to put together the recommendations and the steering group included people from:

• the Association of British Insurers (ABI)
• the British Bankers’ Association (BBA)
• the Building Societies’ Association (BSA)
• Money Advice Service
• Consumer Focus
• Which?

In March 2013, the recommendations were published in the final report of the Sergeant Review of Simple Financial Products. The report recommends the introduction of a set of standards for simple financial products and a recognisable simple financial product badge, to be awarded via a robust accreditation process. The report also recommends the development of a suite of simple savings and insurance products and tasked industry trade bodies – the Association of British Insurers, the British Bankers’ Association and the Building Societies Association – with taking the initiative forward.

Scheme progress

In March 2014 we reviewed industry’s progress on the simple products initiative. The government welcomes the trade associations’ progress to date and its commitment to establish an accreditation framework by the end of the year, which will be an important milestone in bringing simple products to market.

Industry provided further updates on the initiative in July 2014, in which it confirmed the launch of the first simple product and set out its vision for continuing to deliver against the Sergeant Review recommendations with two accreditation frameworks. The government welcomes the industry’s commitment to ensure that the accreditation frameworks are – and remain – properly aligned, and its determination to work together to ensure that the initiative is firmly focused on securing a good outcome for consumers. The government has asked to be updated on the progress of this work in the autumn.

Read the exchange of letters between the trade associations and the Economic Secretary to the Treasury on progress to date