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Press comment: FCA overdraft rules welcome but more to do on financial capability

7 June 2019

If you are covering the FCA’s new measures to address the overdraft market, please see the following comment from Jane Goodland, corporate affairs director at Quilter:

"When it is sustainable and properly planned for debt is a valuable tool.  Almost everyone will use a mix of short-term and long-term borrowing at different points in their lives to help smooth the cost of big financial commitments - mortgages, education, home improvements - for which we may not have the capital readily available.  

"However, it can be deeply damaging when unplanned borrowing becomes a financial burden. The FCA’s Financial Lives Survey in 2017 found that a terrifying 4.1 million have failed to pay bills or credit commitments in three or more of the last six months with around 3.5 million Brits borrowing from friends and family to make ends meet.

"Unplanned debt can quickly spiral from a seemingly harmless stop-gap into a serious financial problem. The consequences are not only for our bank balance, but for the health and stability of family relationships, our mental and physical and wellbeing, and the economy, which suffers a drag effect from unsustainable debt.

"Financial pressures on households to make ends meet result in short-term debt being necessary for many people. We have already seen the regulator clamp down on predatory forms of payday lending in recent years and this curb on exploitative overdrafts is a welcome development.

"This will protect individuals from some of the dangers of financing unsustainable credit arrangements, giving them a better chance of stabilising their finances. However, the trappings of financial insecurity will still exist and much more needs to be done to reduce the causes of unplanned borrowing in the first place. Far too many people have no cash savings buffet to help them smooth over shortfalls in their monthly income and spending. Relying on unplanned credit to meet unexpected bills is not a sustainable strategy and we need to encourage everyone to build at least a cash savings pot equal to a few months of living costs. That will help to ease financial strain by offering a safety net.

"This will only come about through better financial education, higher levels of financial capability and greater familiarity with managing money. Currently, according to the FCA, 46% of all UK adults say they have limited financial knowledge. School leavers are not being equipped with the necessary tools to understand the financial pressures they will face in adulthood and how to manage them effectively. That has to begin with better financial education in schools, beginning at primary age level where evidence shows children begin to form the understanding and behaviours around money."

 

For more information contact

Alex Berry
023 8072 6260
07741 151931
alex.berry@quilter.com

Michael Glenister
020 7778 9638
07469 144 535
michael.glenister@quilterinvestors.com

Notes to Editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £118.4 billion in investments (as at 30 June 2019).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions; and discretionary fund management.

The business is comprised of two segments: Advice and Wealth Management and Wealth Platforms.

Advice and Wealth Management encompasses the financial advice business, Quilter Financial Planning; the discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

Wealth Platforms includes Old Mutual Wealth UK platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

The Quilter plc businesses are being re-branded as follows: 

  • Quilter Financial Planning (previously Intrinsic)
  • Quilter Private Client Advisers (previously Old Mutual Wealth Private Client Advisers)
  • Charles Derby Group (becoming Quilter Financial Advisers)
  • Quilter Financial Adviser School
  • Quilter Cheviot
  • Quilter Investors
  • Old Mutual Wealth (becoming Quilter Wealth Solutions in 2020)
  • Old Mutual International (becoming Quilter International in 2020)

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.