For Immediate Release: Monday 4 December 2000

CONSUMER APATHY PRESENTS FINANCIAL SERVICES INDUSTRY WITH UPHILL STRUGGLE

FACETS (Financial Awareness and Consumer Education Tracking Study) research conducted by AUTIF (Association of Unit Trusts and Investment Funds) reveals that 64% of consumers have no wish to learn about finance

How do you improve people’s understanding of financial matters when they simply don’t want to learn? According to AUTIF’s FACET Study, in spite of feeling unsure about personal finance, most consumers admit they have little interest in finding out more. Moreover, when it comes to being a trusted provider of financial information educational establishments, employers and the Government alike receive pretty poor marks.

Each month an independent team of researchers questions a cross-section of the UK population on its understanding of personal finance matters. In November, results of additional questions on the level of ‘confidence’ and ‘curiosity’ highlighted some serious problems that both the industry and its regulator, the Financial Services Authority, must tackle if the Government’s objective of a more financially aware public is to be achieved.

• Which basic financial topic areas were you really unsure about and which of them, if any, would you like to know more about?
• respondents felt most uncertain about savings and investment (45%), followed by tax (42%) and pensions (39%).
• 22% were unsure about all the topics – (savings/investment, tax, pensions, insurance, mortgages, banks/borrowing/saving).
• 18% said they wanted to know more about pensions, 15% savings and investment, but 64% did not want to learn about anything.

Interestingly, when cross-referenced with the findings of the main FACETS research, those who were able to answer questions correctly were slightly more inclined to learn more about financial matters.

• Who would you most trust to provide you with financial information?
• IFAs proved the most popular choice (30%), followed by banks (28%) and then friends/family (27%).
• Surprisingly, only 2% of respondents would trust schools and colleges to provide financial education.
• But more worrying for the Government and its stakeholder plans, only 2% replied that they would trust their employer or the Government itself to provide this information.
  
  
• How would you most like to see the information supplied to you?
• An overwhelming 67% of respondents stated that they would like financial information supplied on a ‘face to face’ basis.
• The more knowledgeable the respondent, the more they expressed a preference for a ‘face to face’ situation.
• 9% of respondents wanted financial information supplied by newspapers and magazines.
• Just 3% of respondents chose web sites, despite 25% of the sample having access to the Internet.

Respondents were also asked to estimate how many questions in the main survey they felt they had answered correctly. These responses were then compared with their individual answers. In general, those who answered confidently were over confident, whilst those who answered conservatively were unduly cautious and knew more than they thought. Nobody answered all the questions correctly, although 2% suggested they had.

Anne McMeehan, Director of Communications at AUTIF commented:

"This is a cautionary tale for the Government, the financial services industry and its regulators. Two major questions have emerged – not just how do you best inform the public, but how do you stimulate and then encourage interest in financial matters. No matter how poor their understanding, most people show little inclination to improve their financial knowledge. If the Government’s objectives are to be met, this simply has to change."

For further information please contact:

Anne McMeehan, Director of Communications, AUTIF - +44 (0)20 7831 0898
Clare Arber, PR Manager, AUTIF - +44 (0)20 7831 0898

Notes to Editors:
Details regarding the Financial Awareness and Consumer Education Tracking Study are attached (Appendix I). Results from the research are reproduced below.

Q. What subjects do you feel unsure about?

Q. What areas would you like to know more about?

Q. Who would you trust for this information?

Q. How would you like to see this information supplied to you?

Q. Roughly how many questions do you think that you got right?

Appendix I

Attitudes towards financial information research:

The research was carried out as part of AUTIF’s ongoing FACETS research. FACETS (Financial Awareness and Consumer Education Tracking Study) is sponsored by the Association of Unit Trusts and Investment Funds (AUTIF) and is a cross-population study 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; and is then analysed across a wide range of socio-demographic splits using MarketMinder (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 16 questions asked each month covering a wide range of personal financial topics. They are the same questions and do not change unless circumstances specifically demand it, in which case they are 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. Members of the press may see them on request for their own appreciation but are strictly not for publication for fear of interfering with the research.

The questions are asked to establish a True, False, 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.