Open University in Wales - Response to the consultation on a proposed Financial Education and Inclusion (Wales) Bill

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1 Open University in Wales - Response to the consultation on a proposed Financial Education and Inclusion (Wales) Bill About The Open University in Wales 1. The Open University (OU) was established in 1969, with its first students enrolling in It is a world-leader in providing innovative and flexible distance learning opportunities at higher education (HE) level. It is open to people, places, methods and ideas. It promotes educational opportunity and social justice by providing high-quality university education to all who wish to realise their ambitions and fulfil their potential. 2. Over 8,000 students across Wales are currently studying with The Open University, enrolled on over 11,000 modules. There are OU students in every National Assembly for Wales constituency and we are the nation s leading provider of part-time higher education. Almost three out of four Open University students are in employment while they study and with an open admissions policy, no qualifications are necessary to study at degree level. Over a third of our undergraduate students in Wales join us without standard university entry level qualifications. 3. In 2013, for the ninth successive year, The Open University was top in Wales for overall student satisfaction in the National Student Survey. As a world leader in educational technology, our vast open content portfolio includes free study units on the free online learning platform OpenLearn 1 (including many Wales-related materials) and substantial content on YouTube and on itunes U where we have recorded over 66 million downloads. About The True Potential Centre for the Public Understanding of Finance (PUFin) and Managing your Money 4. The Open University is in a position to make a substantial contribution to the development of financial capability and to the teaching of personal finance skills in secondary and further education and in the workplace. This is as a result of the establishment of the True Potential Centre for the Public Understanding of Finance (PUFin) within the Open University s Business School. PUFin was launched in November 2013 to provide the general public with free and open access to short courses that develop personal finance skills. PUFin s development has been supported by True Potential LLP, one of the UK s leading financial services organisations. PUFin also has a mission to develop research into financial capability and to use the findings of this research to further inform the content of the courses in personal finance. Our response to this consultation is based on the expertise of those working within PUFin. 5. Managing My Money is the first course to be created at PUFin. It will be available as a MOOC ( Massive Open Online Course ), free of charge to the general public via the online MOOC platform, FutureLearn 2. An array of audio-visual clips, interactive discussions and quizzes, and engaging resources will be offered on a weekly basis, encouraging active participation to develop financial awareness. The 8 week course runs for the first time from 12 th May and involves study time of around 3 hours a week. As with many other MOOCs the course will run again at future dates so there will be a number of opportunities for people to take part. The trailer for Managing My Money is available on this site 6. Managing My Money will be augmented in 2015 and 2016 by two further MOOCs as well as courses available on OpenLearn. These are aimed at building on the personal financial capability

2 delivered by Managing My Money. The Open University also offers a 30 credit Level 1 (equivalent to CQFW level 4) module called You and your money: personal finance in context 3 through our traditional teaching provision. The Need and Rationale for Personal Finance Education 7. The Open University s decision to develop PUFin, a major new educational initiative, is founded on the recognition that there is an acute need for financial capability education. As a society, our personal finance capabilities are sorely lacking. Many people have little or no grasp of even the most basic tasks and concepts from understanding pay slips and bank statements, to the interest they pay on loans or earn on savings. People are making poor financial decisions as a result. Many take on unmanageable debt and buy (or are mis-sold) financial products they do not understand. 8. Even if people are reluctant to talk about money they do worry about it. The Money Advice Service (MAS) found that while almost fourth fifths of us claim to be confident about managing our money, half are still concerned about our finances. 9. The recent MAS (MAS, 2013) survey 4 also revealed some startling gaps in basic financial skills. Many people in the UK are unable to find the balance on a bank statement, or pick out the best savings account from a choice of three. 10. The economic backdrop has also had a major impact on personal and family finances in the UK. Households are feeling the pressure to make ends meet. One in five has experienced a large drop in real income over the past three years, leaving 52 per cent of the population struggling to pay the bills. 23 per cent of households have experienced a large reduction in income in the last three years Research by True Potential 6 also shows a clear Savings Gap in the UK where too few people are saving enough for a comfortable retirement, made worse by the rising cost of living and longer life expectancy. True Potential s latest quarterly survey of over 2,000 adults shows that a quarter (25 per cent) of people are not saving anything for retirement, while two thirds (64 per cent) are putting aside less than 100 per month. 12. The findings point to an unprecedented savings crisis as Britons realise too late that they do not have enough in savings and investments. The research finds that two thirds (64 per cent) of year olds are not confident that they have put enough aside for a comfortable retirement. 13. We welcome the intention of this legislation to ensure that steps are taken to introduce financial education in schools and to ensure that local authorities promote financial inclusion and literacy. Evidence clearly shows more needs to be done to ensure that access to financial education is as widely available as possible at an early age and to our adult population. Response to inquiry questions Below we have set out our response to the specific questions asked in the consultation documents. We have only answered the questions upon which we have a view or some information / expertise to offer. What are your views on making financial education a statutory part of the curriculum (from Key Stage 2 onwards), in a similar way to personal and social education (PSE) and work-related education? 14. Personal finance education should certainly be a statutory (compulsory) part of the curriculum. Education in personal financial matters helps avoid/reduce the personal finance issues (overindebtedness; reliance on high-cost alternative credit; inadequate pension planning; ineffective MAS (2013), The Financial Capability of the UK 5 Ibid. 6 True Potential (2014), Tackling the UK Savings Gap 2

3 selection and purchase of financial products) that recent studies show are becoming increasingly prevalent. To what extent should there be increased provision of financial education in schools to better prepare young people for the challenges and financial decisions they face beyond school? 15. See paragraph 14. Even teaching the basics of personal finance for example how to draw up and live within a monthly budget would help many to avoid the personal financial problems experienced by large numbers of households. In what ways and to what extent are money and financial matters relevant to what young people should be learning at school? 16. The skills developed by personal finance education reinforce other aspects of education particularly the development and reinforcement of numerical skills. Money and financial matters are relevant even during the time that young people are still in school (or further education). Many young people will be working whilst still studying so learning about budgeting, taxation and the different ways earnings can be saved for the future (maybe to help support higher education studies) would be beneficial. If financial education becomes a statutory part of the curriculum, should schools have flexibility in how they follow guidance on its delivery? (This would be similar to PSE and work-related education but different to the way national curriculum subjects are taught.) 17. We believe that some flexibility should be allowed but around core compulsory components of the personal finance curriculum these being financial planning, how to budget, debt products and management, alternative ways of saving and why pension planning should start early in life. What are your views on the Welsh Government and local education authorities having a statutory duty to ensure financial education is delivered during compulsory education from Key Stage 2 onwards? 18. We believe that a statutory duty to ensure the delivery of financial education would be beneficial. What are your views on the Welsh Government being required to formally consult relevant stakeholders and experts when developing curriculum content on financial education? 19. Consultation in this area would be advisable both in identifying what should be taught but also in respect of which extant teaching assets (e.g. open educational resources such as the OU s Managing My Money MOOC) are available to deliver personal finance education. Which persons and organisations should be consulted? 20. Amongst a range of bodies we certainly believe that further and higher educational institutions (including personal finance research centres like PUFin) as well as advisory bodies like MAS, Citizens Advice Cymru, Age Cymru, Chartered Institute Of Taxation, Personal Finance Education Group and StepChange should be consulted. It would also be important to consult, and work in partnership with, community groups such as Communities First partnerships, social housing providers and housing charities, credit unions and local county voluntary councils. What are your views on making it a duty on Welsh Ministers to review the progress of financial education in schools and to produce an annual report on this? 21. Progress should certainly be reviewed ideally with annual reports initially. Once the personal financial curriculum has bedded down the reports could possibly be provided less regularly. How appropriate or necessary would it be to require universities and further education corporations to provide information to students about where to get advice about financial management? 3

4 22. We believe that many universities and further education bodies already provide guidance on where to seek advice via student unions or university welfare offices. Much free advice on personal finance is already available throughout the UK by bodies such as those detailed in paragraph 20. Are there any implications for the autonomy and status (classification) of higher and further education institutions in placing such a requirement on them? 23. We would not envisage any implications provided that higher and further education institutions are careful to restrict specific financial advice to areas they are not empowered to cover by the Financial Conduct Authority regulatory framework. What are your views on requiring each local authority to have a strategy outlining how it intends to promote financial inclusion and the financial literacy of its residents? 24. Local authorities should be required to have, and deliver, such a strategy. The resourcing of the delivery of the strategy need not be onerous due to the existence of agencies that would be able to support it (see paragraph 20) and of teaching assets that could also support it (see paragraph 19). What are your views on requiring each local authority s financial inclusion strategy to show how authorities intend to: - effectively regulate street trading; - take steps to prohibit cold calling in their area; - engage with credit unions in their area; and - promote financial inclusion when buying goods and services 25. It would make sense for the strategies of local authorities to encompass (but, of course, not be limited to) these four issues. Are there any other things that the strategy should contain in terms of how local authorities promote financial literacy and inclusion? 26. The strategy should contain the aspects of personal finance education identified in paragraph 17. Should the public be able to use online facilities in libraries without having to pay for them, and if so, is it necessary to put this down in law? 27. Financial guidance and education is delivered through a growing number of online sites. Any serious intent to improve personal financial literacy and avoid exclusion for those without access to the internet at home requires that there should be free online facilities in libraries. Do you envisage any problems that could arise by prohibiting libraries from charging for internet access? 28. There could be concerns over demand outstripping supply but these issues could be dealt with by simple operational procedures for example a timetabling system giving a time-slot for use of online facilities (and a time limit). It would also be important to continue outreach work through libraries and other routes to upskill people to enable them to use computers in their own home where possible. Do you foresee any financial implications, in terms of either costs or benefits, for any organisations or persons in relation to the proposals in this document? If so, can you describe and quantify these impacts? 29. Delivering personal financial education in schools and in the higher and further education arenas together with delivery by local authorities clearly implies that costs would have to be incurred in both training those delivering the services and in the actual provision of the services. However the availability of free services and courses, accessible online as well as face-to-face, would mean that 4

5 the costs need not be onerous. Over the medium to longer term a better personal finance educated populace should help to reduce the costs of the support agencies and systems that have to be provided for those that experience the adverse consequences of their own difficulties with financial management. Are there any other comments that you would wish to make on my proposals, which are not addressed in any of the previous answers? 30. We would like to stress the key role that free open educational resources such as the forthcoming Managing My Money Massive Open Online Course (MOOC) can play in delivering financial literacy education. Whilst Managing My Money is 8 weeks long with three hours of study per week (so 24 hours of study in total) the structure of the MOOC, where each week is broken down into around 20 to 25 short steps, means that those employing the MOOC to deliver personal finance education could easily customise it to meet specific needs and deliver it within a reduced time period. 31. More detail about PUFin and Managing My Money is available here: We would be very happy to provide any further detail about our work in this area to those considering this legislation as it develops. April 2014 Contact: Michelle Matheron Tel: Michelle.Matheron@open.ac.uk 5