Embargoed: 12.30pm Monday 2 February 1998
AUTIF ANNOUNCES INITIAL RESULTS OF NEW FINANCIAL AWARENESS &
CONSUMER EDUCATION TRACKING STUDY
- A new study across the British population reveals a low level
of understanding of basic personal finance issues
- Existing savers and investors demonstrate significant confusion
and misunderstanding of products they have already bought
- The AUTIF FACETS Index is designed to track the progress of
Government, regulatory and industry efforts to raise awareness
and improve overall public understanding
- AUTIF calls for the Government to work with the industry to
reduce the complexity of the new Individual Savings Account
- A new press award will be presented in November to the personal
finance team found from the research to have made the most significant
difference to the improvement of understanding amongst its readers
AUTIF announced today its initial findings from its new Financial
Awareness and Consumer Education Tracking Study (FACETS). This ongoing
study, started in August last year, is being conducted each month
across a representative sample of the British population to ascertain
the level of consumer knowledge of basic personal financial matters.
The questions asked relate to current accounts, PEPs, TESSAs, unit
and investment trusts, insurance, pensions, mortgages, investor
protection and financial education for children.
Anne McMeehan, Director of Communications of the Association of
Unit Trusts and Investment Funds said:
"What has become apparent is that the public at large has a very
poor level of understanding of even the most basic financial matters.
The Government's call for an improvement in standards of education
generally must now extend into the incorporation of personal finance
across the school curriculum. Without this, young people will
enter working life ill-equipped to address the increasing need
to make personal provision for their long term financial security."
She continued,
"Of more immediate worry are the Government's plans for the
ISA. The complexity of the ISA, as currently proposed, is likely
to deter new savers, and those who are attracted are in grave
danger of misunderstanding the nature of the product. It must
both be simpler and we must be allowed to describe it more simply."
Findings from the AUTIF FACETS research revealed that 29% of those
currently holding PEPs did not know it was possible only to invest
in one new general PEP each year and 24% of PEP investors got an
elementary tax question on PEPs wrong. 81% of existing unit trust
investors did understand the nature of the spread of risk in unit
trust products, but again 28% of unit trust investors thought their
investment was guaranteed to provide a superior return to bank and
building society deposit accounts.
AUTIF recognises the need to make an active contribution to Government,
regulatory, media and industry efforts to improve the level of awareness
and understanding of personal finance matters amongst consumers.
It is already playing an active role in the Personal Finance Education
Group and in the Pension Education Working Group and as the new
Financial Services Authority has as one of its key objectives, the
education and improvement of understanding amongst consumers, AUTIF
will be a willing and supportive participant in that process.
It is the acknowledged importance of the role of the press in
furthering consumer education that has prompted AUTIF's decision
to make a new personal finance team award based on the FACETS findings.
For further comment please contact:
Philip Warland, Director General, AUTIF, 0171 831
0898
Anne McMeehan, Director of Communications, AUTIF 0171 831 0898
Victoria Nye, Director of Education, AUTIF, 0171 831 0898
Emma Weiss, PR Manager, AUTIF, 0171 831 0898
Notes to editors:
- The cross-population study is based on independent data collected
by RSL, one of the largest operations working in this area and
a leading exponent of computer assisted personal interviewing.
Details are attached. This is then compiled into a practical format
for subsequent interrogation across a wide range of socio-demographic
splits using MarketMinder. Information is attached. For further
details contact Mike Hare - MarketMinder - Tel: 01778 345588
- Each month a sample of 1000 people is filtered to isolate those
responsible for making financial decisions. It is rigorously selected
to reflect the balance of the adult population by sex, age, socio-economic
group and geographical location. People are interviewed on a face
to face basis to ascertain their understanding of basic personal
finance matters that are likely to affect them.
- There are 14 questions asked each month. They are the same questions
and will not change unless circumstances specifically demand it,
in which case they will be replaced by a question of similar weight
and where a lack of understanding or appreciation will have similar
implications for people's financial security. As this is an ongoing
survey these are 'live' questions and therefore their precise
nature and phraseology is not open to general disclosure, although
members of the press may see them on request for their own appreciation
and strictly not for publication for fear of interfering with
the research. The Treasury, other Government advisers and regulators
will be given access to them, so that AUTIF's findings can be
incorporated in the development of their plans.
- The questions are asked to establish a Yes, No, Don't know response,
thereby establishing a number of measurement tools. The main AUTIF
FACETS index is based on knowledge, i.e. those questions that
are correctly answered. In addition AUTIF is in a position to
measure the level of misunderstanding, i.e. where the answer given
is wrong, the level of ignorance where the answer is 'don't know'
and if the last two elements are combined to form a composite,
the understanding 'gap' can be monitored. Furthermore, this can
be carried through to assess understanding on an individual question
basis and to measure any improvement that can be isolated to specific
segments of the population.
- It is not anticipated that there will be much volatility in
these indices and a three month rolling measurement is being used
so as to ensure the sample has maximum relevance. What is sought
is the translation of a positive trend over time in the level
of understanding by the population at large. Any flatness in the
index over time will in itself be a strong message, indicating
a failure by all parties involved, product and service providers,
Government, regulators and the media to penetrate the consciousness
level of the population.
- Changes in the actual FACETS Index will be announced on a quarterly
basis, but on a monthly basis AUTIF plans to release findings
relating to specific areas. AUTIF has been working on this project
since last June. Data has been collected since last August.
- The publications that are to be assessed for the improvement
in understanding amongst their respective personal finance section
readers are: The Express, Daily Mail, Daily Mirror, Daily Telegraph,
The Guardian, The Independent, The Star, The Sun, The Times, Financial
Times, The Independent on Sunday, Mail on Sunday, News of the
World, The Observer, The People, The Express on Sunday, Sunday
Mirror, Sunday Telegraph, Sunday Times, Sunday Business, Money
Which, The Economist, Money Management, Money Observer, What Mortgage,
Mortgage Magazine, What PEP, What Investment, Planned Savings,
Investors Chronicle, Personal Finance, Money Facts and Moneywise.
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