CR News and Case Studies

Prudential plc publishes Financial IQ survey results and announces continued support for Citizens Advice

Released by Prudential plc on 30 Aug 2005

Do we know our iPods from our ISAs?

Although literacy levels are rising across the UK¹ , some Brits are falling down when it comes to understanding their financial abc, according to a new survey released by Prudential today.

Based on a survey of more than 1,000 UK adults, the research reveals that despite 41% of people claiming they are ‘confident’ at handling their finances:

• 15% of 18-24 year olds think an ISA is an iPod accessory, and one in ten an energy drink
• Over half of those surveyed (57%) do not know how much debt or credit they are in
• 45% do not know what a repayment mortgage is - a quarter (23%) believe it is made up of interest only payments
• Over a quarter of respondents (27%) review their finances just once a year, with nearly two-thirds (61%) refusing to seek any kind of professional advice

The survey comes as Prudential announces its funding of a central team that will help develop financial education services across Citizens Advice Bureaux in England and Wales over the next three years. This expansion of its partnership with the national charity is part of Prudential’s broader Financial Literacy programme.

Young pay the price
Whereas 18-24 year-olds claimed to have a good understanding of their finances, the research highlights they are particularly exposed due to a lack of understanding.

Furthermore, while 15% of 18-24 year olds believe that an ISA is an iPod accessory, a further one-in-ten thought it might be a kind of energy drink. Almost a fifth (17%) did not identify a student loan as a type of debt.

One-third (34%) of 18-24s are unable to say how much money they have in their bank account. And no wonder, almost a fifth (18%) throw financial statements straight into the bin, without even opening them.

In the dark about being in the black and red
The findings also highlighted a widespread deficit in knowledge as to matters of debt and credit, with over half (57%) of people surveyed not knowing how much debt they owed.

Worryingly, one-in-ten was unable to identify a mortgage as a form of debt (10.5%), while 15% of over 65s thought an inheritance was a debt.

You are what you earn
Constant back page speculation on the contract wranglings of millionaire footballers means that while 51% of people surveyed could not recall their own weekly salary, one-in-ten men (11%) know exactly how much their favourite footballer pockets each week.

Once a year Brits
More than a quarter (27%) of Brits surveyed review their finances just once a year, while 16% do not review their financial position at all. No surprise when one-in-ten admit that, to them, ‘managing finances is a bit like rocket science’.

Forty-two per-cent of people think that understanding financial management is ‘as important as knowing your abc’, yet nearly two-thirds (61%) do not seek any kind of professional financial advice, according to the research.

Philip Broadley, Group Finance Director who is responsible for Corporate Responsibility, said: “Although we are required to take ever greater responsibility for our financial wellbeing, many of us lack the basic financial know-how.

“Four years ago we began a financial literacy programme and one of the aims was to build the capacity of community organisations in providing financial education services. Our relationship with Citizens Advice to fund a central team that will help develop financial education services across Citizens Advice Bureaux in England and Wales is a significant step towards this goal.

“As a service that is well-known and trusted by the public, with extensive experience in dealing with debt problems, the Citizens Advice Bureau network is ideally placed to deliver this initiative.”

Citizens Advice Director of Policy Teresa Perchard said, “We estimate that our bureaux are currently advising clients with around £2bn of debt between them. Our advisers see at first hand the cost to people of a lack of financial skills and knowledge.

“As well as offering money and debt advice there is a real need for financial education work to help people avoid problems in the first place. Our relationship with Prudential will help us increase the capacity of Citizens Advice Bureaux to deliver financial education to the most vulnerable adults.”

¹December 2004 National Audit Office Report

- ENDS -

Enquiries:

Notes to Editors

1. Research
ICM Research interviewed a random sample of 1023 adults aged 18+ by telephone between 20-21 July 2005. Interviews were conducted across the country and the results have been weighted to the profile of all adults. ICM is a member of the British Polling Council and abides by its rules. Further information at www.icmresearch.co.uk

2. The Prudential / Citizens Advice partnership
Under the new agreement Prudential will fund a central team within Citizens Advice to coordinate and lead the development of financial capability services within Citizens Advice. The team will include a Head of Financial Capability, a Development Officer, a Policy Officer, a Quality Assurance Development Officer, and related Administrative support for the team.

This new agreement builds on the experience and lessons learnt from the nine pilot programmes that Citizens Advice Bureaux have been running for the past three years in England and Wales with funding from Prudential, working with financially excluded, hard-to-reach adults. More details of the pilot projects can be found in the recently published report ‘Capital Gains’ at www.citizensadvice.org.uk.

3. About Prudential plc
Prudential plc is a leading international financial services group, providing retail financial services and fund management in the United Kingdom, the United States, Asia and continental Europe.

To achieve its aim of improving financial literacy, Prudential is collaborating with major charities, research bodies and government organisations, providing financial support and professional resource for a wide range of initiatives targeting the needs of adults, children and educators. In the UK its partners include Citizens Advice, the National Institute for Adult Continuing Education (NIACE), the Scottish Council Foundation, pfeg (the Personal Finance Education Group), and the Specialist Schools Trust. Internationally Prudential is working with the Organisation for Economic Co-operation and Development (OECD), and the Beijing Federation of Trade Unions.

For further information on Prudential’s Corporate Responsibility report for 2004, Acting Responsibly, which outlines our approach towards addressing these issues, please visit our website: http://www.prudential.co.uk/prudentialplc/cr_home/

*Prudential plc, a company incorporated and with its principal place of business in the United Kingdom, and its affiliated companies constitute one of the world's leading financial services groups. Prudential plc is not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America.

4. About the Citizens Advice service

1. The Citizens Advice service is a network of independent charities that helps people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more information see www.citizensadvice.org.uk
2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
3. Most Citizens Advice service staff are trained volunteers, working at around 3,200 service outlets across England and Wales.
4. Advice and information www.adviceguide.org.uk
5. Volunteer hotline 08451 264264 (local rate)
6. Citizens Advice also acts as the UK European Consumer Centre (ECC) providing advice and information helping consumers to resolve disputes within the European Union. Further information available on www.euroconsumer.org.uk

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