McCarthy urges more financial literacy

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The Independent Online

Callum Mccarthy, the chairman of the Financial Services Authority, yesterday took a swipe at the Government for not doing enough to improve the public's financial skills because the task "lies fair and square within the education system."

Callum Mccarthy, the chairman of the Financial Services Authority, yesterday took a swipe at the Government for not doing enough to improve the public's financial skills because the task "lies fair and square within the education system."

Britain's financial regulator told the Insurance Institute of London: "We want to improve the capability of customers to take responsible decisions.

"It is profoundly unhelpful that we start from a low level of competence in financial affairs - something that we are seeking to address through our work on financial capability, but which is a task that lies fair and square within the education system; and a task of a scale that will require a generation to make the full progress needed."

He said people should be able to understand risk and returns are inextricably linked, and that decisions about provision for old age require careful thought.

In a wide-ranging speech, Mr McCarthy criticised the life insurance industry for not describing products clearly enough. However, he conceded that the previous regulatory regime had "failed to properly identify and quantify the liabilities that firms had entered into."

He said that behind the pensions and precipice bond mis-selling scandals lay not only acts of irresponsibility by individual salespeople "but, more worrying, incentive systems and even cultures introduced... by the management of firms that have encouraged irresponsible behaviour." He added: "This is damaging to the consumer, damaging to the firm, and damaging to the reputation of the industry."

But he said he did not want to see the end of with-profits policies. "Far from being a threat to the industry, the proposals which we are now implementing represent a foundation for the future," he said.

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