A new independent report, which contains 13 recommendations to address the urgent financial wellbeing implications of the Covid-19 pandemic, has been released by the Challenge Chairs who advise the Money and Pensions Service (MaPS) on the UK Strategy for Financial Wellbeing.
These recommendations, which include immediate actions, such as help with credit for people coming out of payment deferrals, no-interest loans for people unable to access affordable credit and essential financial skills training for young people – are set out in a report, Building the UK’s financial wellbeing in the light of Covid-19.
The report has been independently written by the UK Strategy for Financial Wellbeing Challenge Chairs. This group of sector leaders started 2020 developing operational plans for the decade-long UK Strategy for Financial Wellbeing, however, when the crisis began to take hold they adapted the way they work to reflect the new needs of people affected by the crisis.
A fundamental aspect to the UK Strategy for Financial Wellbeing is organisations working together for a common goal to better the financial futures of people in the UK. In this report, the Chairs have made recommendations for MaPS, governments, businesses, the financial services and third sectors to work together to take action in order to help lessen the continuing impact of the crisis. They also highlight the impact of Covid-19 on some Black, Asian and Minority Ethnic (BAME) communities, whose financial wellbeing has been particularly affected.
The recommendations have four themes:
Ben Page, Chief Executive, Ipsos MORI (Challenge Group: Credit Counts — Use of Credit) said “All the data we are seeing shows that what started as a physical health crisis is rapidly expanding to become a huge problem for people’s mental and financial wellbeing.”
“These recommendations are challenging and wide-reaching, but they ask important questions of influential organisations to make a difference to people’s lives by December 2021, and much earlier where possible.”
Jackie Leiper Managing Director, Workplace Savings and Distribution, Lloyds Banking Group (Challenge Group: Gender and Financial Wellbeing), said “Even before Covid-19 changed all of our lives and sent shockwaves through the economy, many people in the UK faced tough challenges to their financial wellbeing. The pandemic has magnified these challenges and disproportionately affected many of those who were already disadvantaged – such as the self-employed, part-time workers, young people, women and ethnic minorities.”
“It’s vital that those steps are taken to address existing inequalities so that everyone has the best chance to improve their financial resilience, and that the services and products provided are accessible and relevant to those who need them most.”
The Challenge Group Chairs have focused this report on 13 recommendations that are deliverable by the end of 2021 and will achieve significant improvements in the financial wellbeing of people made acutely vulnerable due to Covid-19.
These recommendations have been developed alongside a wider programme of work contributing to the longer-term delivery plans which will set out how the UK Strategy for Financial Wellbeing will be delivered by the end of 2030. These delivery plans will be published in March 2021 and will have specific commitments for each nation of the UK.
The report also highlights some of the great work being undertaken by organisations around the UK right now, drawing upon a wealth of contributions from across the 11 Challenge Groups including those explicitly tasked with representing the Northern Irish, Scottish and Welsh perspectives.
Emma Douglas, Head of DC at Legal & General Investment Management and Chair of the Pensions and Lifetime Savings Association’s Policy Board (Challenge Group: Future Focus — Long-term savings) said “Challenges such as those we are all experiencing this year, have made us take stock, whether that is around how we spend our time, who is important to us, where and how we work and what our future plans are.”
“The ongoing uncertainty makes longer-term financial planning challenging. We know this has implications for people’s outlook and their wellbeing. We have responsibilities to support them as much as we can; part of this is about how we better support people with making important financial decisions based on making the most of the money they have, and to educate, inform and support them over the course of their financial lives.”
Paul Farmer CBE, CEO, Mind UK (Challenge Group: Mental Health and Financial Wellbeing), said “The coronavirus pandemic is not just a physical health crisis, it’s a mental health one too, and financial stresses can be a key factor in either triggering a mental health problem or making an existing one worse.”
“It’s important that people have the knowledge and skills to empower themselves to make good financial decisions. But it’s also crucial that safeguards are put in place to protect the most vulnerable, including much-needed reform to the benefits system.”
As the body leading the financial wellbeing movement, MaPS has a role to play in all the recommendations made by the Challenge Chairs. However, just over half of the recommendations explicitly call for MaPS to undertake action. MaPS will be responding to these requests by the end of the year.
MAPs Chair Sir Hector Sants said “When, at the start of 2020, MaPS invited 145 industry leaders to join the independent Challenge Groups to work towards the National Goals of the UK Strategy for Financial Wellbeing, we could not have anticipated the impact of Covid-19 on individuals, communities and the regions and nations of the UK as a whole.”
“As it became clear how Covid-19 was affecting UK financial wellbeing, the MaPS Board acted quickly to ask the Groups to pause their strategic work for MaPS and use their extensive experience and knowledge to make recommendations on how the sector as a whole could respond to the immediate crisis.”
“This independent report, therefore represents an important contribution not just to the UK Strategy but wider UK financial wellbeing. MaPS will respond in due course to the challenging recommendations the Groups have made for us.”
“The Challenge Groups will now return their focus to the delivery plans which will set out how we can collectively achieve the ambitious goals set out in the UK Strategy. I am grateful for their continued time, wisdom and ongoing commitment to improving the UK’s financial wellbeing, something which is more important than ever.”
Joanna Elson CBE, Chief Executive of the Money Advice Trust, said “Millions of households were already in financial difficulty going into Covid-19, and many more are now walking a financial tight-rope. Today’s report helpfully outlines a range of challenges people are facing and the scale of support needed to prevent people being pushed into or further into difficulty in the coming months.”
“The report’s recommendation to the government to maintain and extend the benefit relief measures is welcome and follows ours and others calls to extend changes to Universal Credit by retaining the £20 a week increase beyond April. A stronger focus on supporting people in vulnerable circumstances and promoting the government’s ‘Help to Save’ scheme to anyone newly eligible due to the outbreak are also crucial.”
“Alongside these measures, we also need to develop safer routes out of debt for those who do fall behind, and to ensure that creditors aren’t making the situation worse. One major priority here must be improving government’s own debt collection practices – which often lag behind best practice in the private sector.”
“We need a new Government Debt Management Bill to bring fairness to debt collection across central and local government – as well as fundamental reform of the way that bailiffs are used to enforce debts.”