Gresham College Lectures

The Role for Financial Services in Boosting Financial Literacy and Inclusion

February 17, 2023 Gresham College
Gresham College Lectures
The Role for Financial Services in Boosting Financial Literacy and Inclusion
Show Notes Transcript

Numeracy skills, good financial education and financial inclusion are essential ingredients for a thriving, fair economy. The cost-of-living crisis exposes how we need to go further and faster to ensure people have the skills they need to manage their money and improve their prospects in life, and can access useful, affordable financial services. This event and panel discussion brings together speakers with wide-ranging experience across these areas. And the Lord Mayor of London, Nicholas Lyons, will speak about the role the Square Mile can play in supporting numeracy, financial literacy and inclusion.


A lecture by The Rt Hon. The Lord Mayor Nicholas Lyons with Andrew Haldane, Sacha Romanovitch OBE and Patrick Jenkins recorded on 13 February 2023 at The Old Library, Guildhall, London.

The transcript and downloadable versions of the lecture are available from the Gresham College website: https://www.gresham.ac.uk/watch-now/lord-mayor-23

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(text whooshing)- Mr. Lord Mayor, ladies and gentlemen, my name's Martin Elliott, and I have the privilege of being the current provost at Gresham College, which has been providing free education to the people of London since 1597 and worldwide since the advent of the internet. As Hernan Diaz said in his 2022 novel "Trust," which is about the world of high finance in New York,"No investment pays higher dividends than education." Now further to support that contention, I'm pleased to welcome you tonight to the Gresham College Annual Lord Mayor's Event. The Lord Mayor of the City of London is the president of Gresham College and the City of London Corporation, which together with the Mercers' Livery Company, support the college as trustees of Sir Thomas Gresham as well. The Lord Mayor, The Right Honourable Alderman Nicholas Lyons has had a glittering career in finance, and in his mayoral year will champion financing our future, promoting a resilient, resourceful, and responsible city, deploying capital and expertise to supercharge economic growth nationwide and to grow our global competitiveness. Tonight, Alderman Lyons will consider the role for financial services in boosting financial literacy and inclusion, vital for ignorant lack-of-money people like me. But following his lecture, he will chair a discussion with a brilliant group of influential panelists, Sacha Romanovitch, CEO of Fair4All Finance and co-chair of The Inclusive Economic Partnership, former CEO of Grant Thornton, Patrick Jenkins, deputy editor of the "Financial Times," and Andrew Haldane, CEO of the Royal Society of the Arts, chair of the government's Levelling Up Advisory Council and former chief economist of the Bank of England. Ladies and gentlemen, we're in for a treat, and may I ask you please to welcome the Lord Mayor of the City of London, The Right Honourable Alderman Nicholas Lyons.(audience applauding)- Well, good evening, everyone, and it's a great pleasure to welcome you here to the Guildhall this evening. For those of you who don't know me, I'm Nicholas Lyons, the 694th Lord Mayor of London and the civic head of the City of London Corporation. So welcome for this Gresham College lecture on the role for financial services in boosting financial literacy and inclusion. In the UK today, around half of working-age adults have the numeracy level expected of a primary school child. As a nation, we are unfazed, even amused, when people pronounce themselves hopeless at maths, but it is no laughing matter because at the same time, a quarter of adults have less than 100 pounds in savings, and half of people don't feel confident managing their money day to day. Poor financial ability is just one of the issues facing the 12.9 million adults with low financial resilience, a term that covers the unsteady starters, renting rooms and working zero-hours contracts, right up to those in their un-golden years who have stable but low pension incomes. The nation's productivity is affected because people's disposable income isn't rising, nor are they able to save adequately for a comfortable retirement. Across the UK, people in vulnerable financial circumstances are finding themselves shut out from mainstream financial services like credit and insurance that could help them weather the storm. For example, when the washing machine breaks down, they can't just buy a new one, forced to turn instead to a rent-to-own company and pay twice the retail price, typical of what we call the poverty premium. To paraphrase the theory of socioeconomic unfairness set out in Terry Pratchett's 1993 novel "Men at Arms," the rich stay rich because they can afford to buy one good pair of boots. The poor stay poor because they must buy several bad pairs, and they still end up with wet feet. Numeracy, financial literacy, and financial inclusion are the building blocks of a fairer society. They help people make sense of their money, plan for the future, manage unexpected shocks, and get on in life. In 2023, too many people are being held back because they lack these basic skills and access, and efforts to tackle the nation's widening wealth gap are made much harder. The UK financial services is arguably the best in the world. I believe we have a duty to use our experience, our expertise, and our resources to support the most vulnerable in society and ensure that everyone benefits from the Square Mile's success. Today I'll explore the role the city can play in improving numeracy financial education and access to finance. These issues are related but distinct, so I'd like to address each in turn, beginning with numeracy. There's a false assumption that maths starts and stops in the classroom, and anyway, we have calculators on our phones, don't we? But the ability to understand and work with numbers is fundamental to the fabric of our lives. We begin to gain an early sense of numeracy in babyhood, developing a sense of space, shape, and measure as we explore the world around us. When you estimate the distance of the car in front of you while driving, when you put together flat-pack furniture, good luck with that, when you filled your shopping basket, you're using numeracy skills. Home to the world's biggest foreign exchange and derivatives markets, the global headquarters of leading financial firms and so much more, the city runs on numbers, yet the UK's numeracy levels are significantly below average for the OECD and well behind leading countries such as Japan and Finland, a figure that should shock and shame us. A lack of basic numeracy skills is preventing people across the nation from reaching their potential in work and in life, and it's also a huge barrier to learning more about their finances. If someone has never learned how a percentage works, how can they be expected to understand interest rates or compound annual growth rates, the most important concept in finance. Many people think maths ability is fixed, but that's simply not true, and that's why my charity, The Lord Mayor's Appeal, has partnered with National Numeracy, represented today by Vice Chair Andy Haldane, which seeks to foster a culture where people of all ages feel comfortable trying to improve their numeracy skills. Research has shown that workers with low numeracy earn around 6 1/2% less than if they had a grasp of the basics, and one in four people would be deterred from applying for a job if handling numbers was a requirement. Through its Every Londoner Counts initiative, National Numeracy is helping Londoners build their numeracy skills through a network of 500 newly trained Numeracy Champions. The charity also offers a free skill-building tool, National Numeracy Challenge, and National Numeracy's work is so important because we know poor numeracy skills are hampering groups who are already at a disadvantage. Research shows that women are twice as anxious as men about maths, and while 45% of men have the numeracy level expected of an 11-year-old child, that rises to 63% of women. We also know numeracy skills are weakest in regions where incomes are lowest, and the North East, West Midlands, and Yorkshire and the Humber all have a higher proportion of working-age adults with lower numeracy skills than the rest of the UK. The government has set out a vision for a more productive, prosperous country where everyone can succeed, which the City Corporation, of course, wholeheartedly support, but it's clear that unless we pull together to improve basic numeracy levels, Levelling Up will remain just that, a vision. Now let's look at financial literacy. Good numeracy skills and financial literacy go hand in hand, and people need both to be able to make sense of an increasingly complex and pressurized financial landscape. Let me be clear, by financial literacy, I don't mean financial expertise. What I'm talking about is a basic understanding of financial concepts like budgeting, which set an individual up to manage their money and avoid financial abuse. Research from the Center for Social Justice found that nearly half of adults who've experienced financial hardship think low money management skills played an important role, and their situation would improve with more financial education. So what's being done in response to that clear call to action? While research shows children's money habits are formed as early as age seven, financial education is absent from the primary curriculum. It was introduced to the secondary curriculum in 2014, but low confidence among teachers in delivering the topic, lack of resources, packed PHSE lessons, and the absence of formal assessment means that many teens are still leaving school without a quality financial education. A recent study found that kids aren't all right about that. An encouraging 72% of pupils want to learn more about money, rising to 85% of 17 to 18-year-olds. The "Financial Times'" Financial Literacy and Inclusion Campaign, represented today by Patrick Jenkins, wants to make learning how to manage your money as common as learning how to ride a bike. Supported by funding from the City Corporation, FLIC has developed a financial education program that'll be piloted in the City of London Academy Shoreditch in a few weeks. The hope is that by focusing on training teachers, FLIC will embed financial education in the curriculum and create a model that can be replicated across the country. Initiatives like this are so important because the TikTok generation is entering a more sophisticated and a more dangerous world. 55,000 children aged 11 to 16 are estimated to be problem gamblers. Meanwhile, The Children's Society reports that more and more young people are being financially exploited online. The cost-of-living crisis provides further impetus for improved financial education. In January 2022, a pint of milk cost 46 P. In December, it was 69 P, a 50% increase, and just one example of how prices have rocketed. More than 150,000 people turned to Citizens Advice for crisis support for the first time last year, 150,000 people, and one in three people would struggle to find an extra 20 pounds a month if they needed to, the cost of a school blazer. Could financial education help people feel less hopeless? And would you want your child or grandchild to enter a financial climate like this without a basic grasp of money matters? These are important questions to ask ourselves, not least because of the very real impact financial hardship can have on people's health. Children living in poverty are more likely to suffer from chronic diseases and three times more likely to suffer from a mental health problem, and the more debt people have, the more likely they are to have a mental disorder. The Lord Mayor's Appeal is proud to have partnered with MQ Mental Health Research, which is investigating the impact of the cost-of-living crisis on the nation's mental health and will produce evidence-based recommendations on how we can support the most vulnerable. I'm interested to see if that work confirms what feels intuitive, that building financial literacy could help boost people's financial and mental resilience. I know the government recognizes the need for improved financial education, and I'm pleased to see local authorities benefiting from its 560 million pound Multiply scheme to improve adult numeracy. But clearly more support is needed for secondary teachers to deliver statutory financial education. The prime minister's commitment to extending maths education to 18 is to be welcomed, though I'm sure I'm not alone in wondering how this is compatible with the shortage of qualified maths teachers. I hope this policy doesn't lead to more maths for maths' sake, but instead focuses on practical lessons that will prepare teens for the real world. Employers also have a role to play, and at the World Economic Forum, I was pleased to take part in the launch of Make Time for Money Week, which asks employers to donate four hours for employees to focus on improving their financial health. I know there's a lot of activity concentrated in certain areas, geographic areas, for example, to our hamlets, and we could learn a lot from pooling the findings of different groups operating in that one space. For example, local charity The Switch works with business volunteers to deliver employability skills to students, including the Abacus Family Financial Literacy project in partnership with Lloyd's Community Programme. There are lots of great initiatives being pioneered by our financial service companies, but how can we shape change on a large scale? And so to financial inclusion. Of course, we know education alone won't pull families out of debt, and the cost-of-living crisis also exposes gaping holes within the financial services system for useful affordable products, services, and advice. For people experiencing financial hardship, the best deal available is often a bad deal. Demand for unregulated buy now, pay later loans has soared. I even saw one BNPL company promoting purchasing a burger in installments. Meanwhile, energy regulator Ofgem had to intervene earlier this month to stop energy companies installing more costly prepayment meters in the homes of vulnerable people. As CEO of Fair4All Finance, Sacha Romanovitch, who's with us today, has pointed out, our financial system is designed around people with predictable lives and predictable incomes. But in 2023 Britain, how many fit that description, cost-of-living crisis, or no? For example, a direct debit is incredibly helpful for someone on a fixed wage but incredibly hazardous for someone on a zero-hours contract. Fair4All Finance is one of the organizations trying to broaden access to financial services. Their No Interest Loan Scheme has already allowed participants in Manchester to buy new white goods to keep their family running. Elsewhere, Fair for You have teamed up with Iceland to launch a food club that gives parents small amounts of credit during the expensive school holiday period. The government's Help to Save scheme, which gives low earners a savings boost, reached 359,000 signups in March. Meanwhile, the Financial Services and Markets Bill will legislate for access to cash and allow all important credit unions to offer a wider range of products and services to their 1.4 million customers. This is all excellent work, but as Europe's premier financial hub, the Square Mile needs to develop the financial solutions needed for this variable and volatile world. Business is driven by its financial purpose, yes, but also increasingly by its societal responsibility and an awareness of the role the private sector plays in stimulating economic growth. As a global representative for the UK financial and professional services sector, I want to encourage businesses to look again at their offer and to consider firstly how they can help people cope with the immediate cost-of-living challenge through measures like debt repayment deferrals, and secondly how they can ensure everyone in society is aware of, understands, and can access products and services to help them manage their money long term. We're seeing some great initiatives in areas like banking, fintech, and insurance, a few of which I want to mention today while highlighting scope for further action. Looking at banking in the UK today, around 1.2 million people are unbanked, which means they don't have access to financial services. For some, that's a choice, but many people are unaware of the availability of basic bank accounts designed for those with poor credit scores or otherwise find them hard to access. The pandemic didn't lead to the tsunami of non-performing loans that was predicted, but then again, banks aren't servicing households in the bottom 10%. Of course, I'm not suggesting that the credit risk posed by less financially resilient clients can or should be ignored, but there is an argument for that risk to be priced into banks' overall offer to clients so we can share the cost across the whole portfolio and bring people on the edges of society into the banking system. In 2019, the FCA stepped into stop banks from charging higher prices for unarranged overdrafts, but there is a long way to go to democratize the banking system. Research by the "FT" and Ipsos MORI found that barely half of respondents were able to correctly compare the costs of borrowing via credit cards or bank overdrafts, regardless of wealth or gender. Alongside improved communication, more must be done to fill the financial advice gap between those who can get financial advice and those who want it but can't afford it. 73% of advisors think that gap has worsened over the last five years, and nearly all those surveyed think technology is crucial to bridging it. I'd like to see a market-to-market analysis of where we stand in relation to other countries that have had to tackle these issues. In a push for inclusion, in 2014, the Reserve Bank of India directed banks to allow people to open a savings account with a single photo ID. As of January 2021, 417 million bank accounts have been opened under that scheme. Greater use of digital tech could help deliver a fairer, more sustainable marketplace, but this won't come without a cost, which would probably need to be borne by our banking system. Let's consider fintech. Research shows that there is a positive correlation between fintech and financial inclusion and that fintech can help narrow class and regional divides. Fintech can help customers shop around for deals, spread costs, and get cheaper access to credit. Money management apps such as Snoop, Moneyhub, and Emma allow users to see all their finances in one place, track their spending, and create budgeting goals, and the Wagestream app helps consumers make emergency purchases by letting them access their wages at any point in the month. On insurance, the Financial Conduct Authority has stepped into stop existing customers being charged more than new customers when they renew their motor and home insurance. The ABI is also doing great work to broaden access, including launching mental health standards to help those with a history of mental health to get insured. In pensions, auto-enrollment has increased the number of policyholders by 10 million in the last 10 years, but businesses with fewer than five employees and the self-employed are excluded from the system. Common platforms, technology platforms for this segment of the population could help solve these problems, but it requires more cooperation and bigger vision from financial and professional service firms. Clearly it will require a group effort to turn the dial on numeracy, financial literacy, and inclusion. As Lord Mayor, I see it as my responsibility to use the city's unique convening power to unite those different groups and to come up with a coordinated plan for further action. On the 12th of April, I will bring academics, charities, businesses, regulators, and politicians together for the first Financial Literacy and Inclusion Summit at Mansion House. This summit seeks to establish what best practice looks like, identify where there are gaps and weaknesses, and most importantly, map out the next steps. The City of London receives its fair share of scrutiny, but it has been and can be a tremendous force for good. Organizations like the ones our panelists represent are doing fantastic work, but the Square Mile must pull its weight. There is a clear incentive for us as manufacturers of financial services to ensure our customers are better served and better informed. It is the responsible way to finance our future. If we come together, we can create a more resilient, more equal society where people have the skills and support they need to manage their money and reach their true potential, thank you.(audience applauding) So I'm going to take a breather now, and I'm going to ask my three extraordinary panelists, Patrick Jenkins, Sacha Romanovitch, and Andy Haldane, to just share with us some of their thoughts from the firsthand experience that they have in all sorts of different ways. Patrick, maybe I can start with you.- Sure, well, first of all, thank you so much for inviting me to what is an extremely important event, and you've highlighted many of the reasons why. It echoes actually a lot of our thinking when we set up our charity. It was a twinkle in my eye three years ago when I became deputy editor of the "FT." It took a while, but 18 months or so ago, we launched what has become known as FLIC, the Financial Literacy and Inclusion Campaign, and as you said, it's kind of twofold, really, the reasons behind our wanting to do this. Aside from the fact that we felt it was very important that the "Financial Times" did something proactively in this space in a way that aligned with what the "FT" is all about subject-wise, but also give something back in the kind of way that you're talking about is relevant for the city as a whole. And it's not just about helping people avoid pitfalls. It's about empowering people to achieve their full potential. So it's a real key part of, we were talking, Sacha and I, earlier about the productivity puzzle in the city and around the country, and you know, this is a very simple part of that puzzle. So what has FLIC been up to since we were created? Well, our main focus has been, as you mentioned, developing an educational program for young people. We're piloting, we've been piloting for the past 12 months or so in various school settings around the country. But we're doing a full whole-school pilot starting in a couple of weeks' time in a school, this is with partial funding from the City of London Academies Trust, which is very promising. It's in Shoreditch Park, and we hope based on the learnings from that program to then roll out this six-week teaching program to schools around the country. Any school that wants this program can have it. We won't be sitting back and waiting for people to come to us. We'll be very proactively rolling it out with partners around the country. But as you said, it would be so much more, so much more straightforward to do, so much more, so much smoother to be able to do this if we had proactive government support for this through, for example, the math to 18 program, including explicitly financial literacy as a part of that agenda because it absolutely chimes with what the prime minister was saying, that his reasoning was not only to educate people ready for careers that depend on high levels of maths but actually also to educate the population in everyday maths. So I think following through on that, we would be very, very keen to see financial literacy explicitly become part of the compulsory curriculum. And that's another, actually another arm of what we're doing as well as creating the curriculum material and teaching teachers as well as students. We are lobbying both in the UK and when we move abroad as well internationally, we'll be lobbying for governments to make financial literacy a compulsory part of the way things are taught. Just to mention a few other things that we've been doing, and as you said, kids do want to learn, you know. In our pilot so far, we have hugely positive responses to the programs we've put forward, but they also, not all kids want to engage at school, but we want to reach the kids that perhaps don't want to learn through an academic means. And one of our most successful initiatives has been a program of short videos that we've put out through social media channels. We put out 10 videos on one day in early September as an experiment. We had one million views within a couple of weeks. It was hugely powerful, and we think that's going to be a key part of the way we work going forward. I've talked about young people as probably our primary focus so far. Our other two demographics that we're focusing on are women and disenfranchised populations, and these three are all parts of society that consistently show underperformance in financial literacy testing, so that's why we've focused on them. And for those, we've produced another set of content. For example, part funded by the ABI, we've begun a program of work to promote financial basics to people working in jobs with unpredictable incomes, exactly the type of individuals you were talking about, who find it difficult, direct debits of their enemy. So that's been a big focus, and we'll be developing that. And for women, we've helped by FT Live, the FT conferences division, we've held Q&A sessions, which have gone viral as well in this kind of format, a live session, has also been streamed. So none of this, of course, would be possible without the kind donations of FLIC supporters which have been primarily "FT" readers, in addition, of course, as I said to the City of London, the ABI and a few private sector companies as well. But to echo the Lord Mayor's Appeal, we really, really do need more support to continue this very important work. So thank you for the opportunity.- Thank you very much, Patrick, and clearly the reputation and reach of the "Financial Times" is immensely powerful in getting the word out.- Yeah, you talked about your convening power. We feel we've got a similar but maybe complementary convening power that we feel is very important to bring to bear, yeah.- Very good, super, Sacha, maybe you could talk to us a little bit about financial inclusion.- Brilliant, thank you, Lord Mayor, and just thanks for everybody for giving up their time on a Monday evening and for making financial inclusion part of your campaign. It's incredibly important. So Fair4All Finance, we were founded in 2019, and we're actually funded by dormant assets, which means effectively money that people forgot existed is going to make a difference for people for whom every pound counts. And so I think it's a really great example of actually a voluntary scheme that currently banks, it will be expanded to other city organizations, participate in where they find that lost money, and it is able to be put to use for good purposes. So when we were set up, it was in absolute recognition that financial literacy and numeracy are important, and yet actually there was a real gap which was around people being able to access the financial products and services that can provide them with a stepping stone to financial resilience. And Lord Mayor, we've talked about some of these, and so maybe I'll just pick, pick, pick them out in turn. The first is the access to affordable credit. When you've got 17 1/2 million people in financially vulnerable circumstances, 14 million people with less than a hundred pounds in savings, things like a washing machine breaking down or even getting a washing machine can be an insurmountable hurdle for people. And post the financial crisis, for actually very good reasons, mainstream banks withdrew from providing small amounts of unsecured credit to people. What happened? You are all very familiar with the likes of Wonga, the payday lenders, and that boom, and quite, rightly the regulators clamped down on that. But what's happened is that's left this enormous gap, and so currently we estimate there's about a two-to-three-billion-pound gap between what is needed in those small amounts of unsecured credit and what's available through credit unions and CDFIs that provide that for people. When a gap exists in the marketplace, people spot an opportunity, and sadly at the moment, it's organized crime and illegal money lending that is looking to step into that gap. And I won't distress people, maybe you can corner me over a drink later, some of the stories I've heard are truly shocking for 2023 in the UK. As the Lord Mayor said, we've been funding Fair for You. We do both investment, we research what works. We are able to then start to put together what structural mechanisms might be needed to ensure that that market gap is filled well. For me, it's often the stories that really stick in my mind, and the two stories I will share which I think bring out the importance of this access and also why sometimes the "Well, people should just save up" is not really stepping into the reality of what people's lives are like. So the first one is a lady who was a customer of Fair for You, and she was able to get some, get her first loan to be able to get a washer/dryer. She was a single mother, she had two children. Her son was severely autistic and was doubly incontinent. And before that, they didn't have much money, she was washing his clothes and drying them with a hair dryer, and he was bullied at school because he smelt. So she told me the transformative effect that actually having a washer/dryer had made on her life and the difference it made. And you think that's pretty powerful, don't you? Until she said "Oh, but it was the second loan that really made the difference. I was able to get him his own bed, which meant I wasn't sharing a bed with him, and now I sleep at night." And she's been able to now move into getting part-time work. So with Fair for You, they've been able to demonstrate the social value of being able to write those small loans is delivering. For every pound that is actually lent, it's delivering at least 12 pounds' worth of social value to the economy, people's ability to participate. I was also speaking to a social housing provider recently, and they were talking about some of the systemic challenges. And they said, "We're building social housing these days where it's got a nice space for a water/dryer, and we don't provide outside space for drying anymore." But then people can't afford to fill that space in their kitchen, and so the clothes are around their houses and apartments and without the heating on, the condensation and the damp and everything that we know. So the knock-on impact of not having access to these small amounts of money is enormous. The challenge in scaling up affordable credit is actually getting finance from the city, getting lending capital and getting first-last capital is really hard for the organizations that are doing this well. And we have to ask ourselves as well, is it right that eight million people in the UK cannot turn to a mainstream bank to be able to provide access to those basic things for them? We are also paying attention to products and services. One in four people don't have insurance, that lifeline for life events, making insurance so that it's affordable, so that if you miss a payment because you are on a variable income, you don't suddenly find your policy has stopped when you need it most. Those are challenges that we're facing as well. And looking at where there are gaps, so the No Interest Loan Scheme has been a really good example. Many councils in the cost-of-living crisis are looking at how can they make their hardship funds go further. Well, actually a lot of people could afford to borrow but not pay the interest. They might be deemed to be a bit too risky to lend to, but with some underwrite, they could be lent to. What we found is that over 90% of those people on our pilot scheme who would've been deemed too risky to lend to are actually repaying just fine and that those loans are actually giving them the opportunity to borrow the deposit for a nursery place so they can actually get the nursery place and get into work, to buy the secondhand car that gives them the means to actually get to work to take that job. So the difference that the access to financial products and services can make just can't be understated, but it just needs people to work with us, and we're really privileged to be working on a systemic issue with some funding to do it. And we know that collaborating with government, with civil society, and with business, then it really is possible to transform the lives of millions of people in the UK today. So that's me, I get on my soapbox, you know that.(group laughing)- That's why you're here, Sacha. That's great. That's very helpful. Andy, over to you.- Thank you, everyone, good to see you all. Hard to follow Sacha's fantastic and terrible stories at the same time. Let me congratulate you, though, Lord Mayor, for that fantastic Gresham Lecture, which I think set out so compellingly why we as a nation need to build our capacity across numeracy, across financial inclusion, and across financial education. That triumvirate really defined most of my professional life, in truth, at the Bank of England, where alongside setting those interest rates that no one understands, Lord Mayor, I had a hand in building out the bank's financial education program in schools, and then as you mentioned, in my role as vice chair of National Numeracy working in partnership with you and your team, which we're honored to do for your Lord Mayor's Appeal and then latterly and most recently at the RSA, who have previous on education stretching back at least 150 years. Truth be told, those three issues are problems of long standing, and we have made few, if any, inroads on them over the past generation or so. The FCA's Financial Lives survey 2020 had as many as 86% of people rating their knowledge of financial matters as low, and those problems are even more acute among younger cohorts of people, you know, fully half of whom are facing financial precarity of various types and fully 3/4 of whom have financial knowledge that is ill-equipped to tackle those precarious forces. Indeed, you mentioned the mental health, mental health epidemic facing those younger cohorts. That is not unrelated to those financial pressures and bodes ill, I think, for both the financial and mental health of future generations. I welcome, Lord Mayor, Lord Mayor's Appeal's work on just those issues. And all of that is hard to make sense of, isn't it?'Cause we as a nation have a real richness when it comes to financial expertise in and around this Square Mile and indeed beyond. We have the simultaneous richness of expertise and resources in one place and yet these yawning deficits of knowledge in others. And those disparities have without question been made worse, worse, much worse by the cost-of-living crisis of the past several years, which has fallen disproportionately on those people and places that were poorest to begin with. So recent research from National Numeracy in collaboration with Experian operating at the postcode level has illustrated that those facing the most acute challenges financially are also those operating with lowest levels of numeracy, or put differently, those facing the most acute financial stresses are also those people least well-equipped to handle those stresses, a genuine double-whammy. So however acute those pressures a few years ago, we can say with some certainty they are more acute still now. What was a policy priority a year ago is now a policy imperative. So what purposefully might be done? I hugely welcome the summit that you mentioned, Lord Mayor, on financial literacy and inclusion. I hugely welcome that Every Londoner Counts initiative that we're doing at National Numeracy in partnership with the Lord Mayor, those 500 Numeracy Champions supporting the least-advantaged communities. That's a means of recycling those surpluses of expertise into those communities facing significant deficits of the selfsame expertise. The government's Multiply initiative I think can and should reach widely and deeply into communities, especially if we can do it on a continuous basis. But I think in fairness on that, even with all of those initiatives in place, we will fall short given the scale of challenge we face. Truth be told, I think ultimately we need to rethink and reframe pretty fundamentally our education and learning model if we are to reach those millions upon millions of both young people and adults that currently face acute anxieties about both numeracy, numbers, and about finance. And that calls, I think, for us experimenting with very different approaches to teaching and learning. The traditional chalk-and-talk approach accompanied by examinations, you could not imagine a system more likely to generate anxiety about finance and numbers than that one, and it needs fundamental root and branch rethink, rethinking and retooling. We do need a system of learning that's much more practically focused on people's everyday problems and everyday lives. We need one that is not rooted in examination with its pass-or-fail culture. We need one much more digital in its orientation, including the use of techniques such as gaming as a vehicle for learning. We need a system with far greater degrees of personalization, learning journeys attuned to people's individual learning styles, circumstances, and capabilities. Never before in human history have we been able to personalize a learning journey, but now we can. In the same way as we are personalizing medicine, we absolutely can and should personalize learning, harnessing that deep well of embedded expertise in UK financial services alongside the UK's deep well of expertise in tech and AI to go from laggard to leader when it comes to personalizing people's journeys for financial education and inclusion. That would be a legacy that Gresham himself, a great inventor, would be proud, and what better way and what better place to make good on that than here. Let me stop there, Lord Mayor.- Thank you, Andy, that's fantastic, terrific. I'm conscious that you're expecting to be wined at seven o'clock, and I know this audience gets very anxious when they know that that time's approaching. I think we were going to have an opportunity, Provost, perhaps for Q&A?- [Martin] Yeah.- Can I hand over to you?- Thank you. Thank you very much, indeed. It was a wonderful panel. I'm going to, we have a lot of people watching online as well, so I'm going, first of all, going to take a question from online, which includes an acronym, an acronym I don't know, so I'm hoping one of you will explain it."More inclusion means simplification of the access process," for example, the Indian example you gave us,"yet AML regulation complicates the process. How do you resolve that?" What is AML, please?- AML is anti-money laundering.- Oh, right, very good.- I think probably KYC is probably what he's driving at, know your client. These are, of course, requirements on banks to make sure that they have done their due diligence before taking on new clients. So I would agree that this is non-trivial. This is not simply a question, though, of photo ID. There's also a technological platform which becomes the model that all financial institutions looking at that segment of a client base looks at. So the point about it is this is one of those areas where our financial services system has built itself up to be as strong as it is globally because it's competed at every turn, and we mustn't lose that competitive instinct. But there are times, particularly when you're looking at this unbanked population, where I personally believe we need to come together as an industry to find a solution that we all participate in, that we all contribute to the cost of, and the cheapest and most effective way to do that is to have one technological platform rather than a multiplicity so that we can deal with those AML and KYC challenges.- I would just add one thing is that HSBC are a great example of a bank that have taken a lead. They've managed to create a homeless bank account. It is quite possible to actually verify somebody's identity, even when they don't have a fixed abode. And I think that the technological platform of getting something that's simple across the board, I must admit, it doesn't just apply to actually access. Any women in here who've chosen to keep their maiden name but also have a passport in their married name? Can't get identified for love or money, so it's.(audience laughs)- I'm conscious that Sherard Cowper-Coles from HSBC has just put his hand up, perhaps to contribute on that particular point.- [Sherard] Yeah, well, thank you, Lord Mayor. I wasn't going to-- Oh.- Could you take the microphone for us, please?- Thank you, Lord Mayor. I wasn't going to speak wearing my HSBC hat, although I owe Douglas Flint a great deal of thanks because when I joined HSBC nearly 10 years ago, he put me to work on financial inclusion, and I was lucky enough to spend nearly six years chairing the UK Financial Inclusion Commission, and I just wanted to endorse everything you said, Lord Mayor. I think it's a absolutely outstanding lecture. I hope you send it to the prime minister, the chancellor, the leader of the opposition, and Rachel Reeves. And I wanted also to endorse everything that Andy said, because what's happened, and which breaks my heart, is we are treading water. Lots of good things are being done by Sacha, by Patrick, by all the different charities, but things aren't really fundamentally improving. And what we need is a national drive, bipartisan. We need the Treasury to get behind this. They set up a financial inclusion forum driven by my commission, but forum is the Latin for talking shop. It's not really for getting stuff done. We need legislation, we need it in the national curriculum. We need a minister for financial inclusion, and we need a financial health service or the equivalent thereof. And it needs ministers to drive this, not just leaving it to people like Sacha and Patrick and Andy and you, Lord Mayor. And I hope your summit in April really does hammer this point home. You've hit on an absolutely crucial. I'll just end by the thought, when I was a boy, the Access card came out, and the slogan for Access was "Access takes the waiting out of wanting." And there was some bishop who attacked this as being, but there is a cultural problem in the Anglo-Saxon countries about attitudes to money and thrift and saving that needs to be addressed by summits like yours and by national action, so thank you, Lord Mayor. What you're doing is for hundreds of thousands of people across this country, and it couldn't be more important.- Thank you.(audience applauding)- Hi, thank you, very interesting range of topics covered. Professor Atul Shah, City University of London. What about the enabling role of financial institution in terms of exploiting customers who are illiterate in finance? Last week at the Treasury Select Committee, I think the chief executives of the banks were brought forward, and they were asked about savings interest rates, and the answers were absolutely appalling. Credit card interest rates start at 24%, and they are the same when savings interest rates were 0%. And I can go on, right? Simple things like lending, and these same banks, I think today the news is they made record profits at the expense of all that you've been talking about, that the country is in dire straits, and these banks have made record profits. So if we talk about the good things these banks are doing and about the good intelligence when they are quite often fraudulent criminal organizations and they have been in and out of the courtroom for years and years, are we being nice, or are we being realistic? Thank you.- Well, good challenge.(audience applauding) And I think, I hope that you took away from what I said that this is not something where I think the banks are without fault. By contrast. I'm actually saying that there is a real dearth of service that the banks are not providing. But we also have to recognize that we have to create the environment to encourage financial institutions to provide these services, and banks are not, you know, are not going to, we can't look at the banks as the lenders of last resort to groups of people who, you know, who are not going to be able to repay loans. The banks are not there for charitable purposes. We have to shape something in a way that makes sense. So wat I was suggesting there is that Sacha used these statistics that of this group, 90% managed to repay their loans, of this group of what are otherwise hard to bank. That means 10% are not, and what the banks are doing is they're charging, they're putting a charging structure in place that looks at that segment of 100, and it increases the cost for everybody. What I'm suggesting is that actually they should look at that 10% and spread the cost of those non-performing loans, at that 10% across the whole of their banking population. Now, that can only happen if everybody does it. Otherwise you end up in a situation where, you know, one bank does it and ends up with poorer performing-- Yes, well, and Patrick perhaps, there's a question hidden behind that, which is how much can the man in the street trust the banking system? Because trust is a key part of this. If you're wanting to trust that group of people to give you money, and then they're not going to nick it and run off and get richer.- [Audience Member] It's not trust. It's active exploitation, knowing exploitation, people with knowledge and expertise structuring savings contracts, mortgages, credit card loans to exploit(indistinct), car loans, you name it, every kind of financial fraud, including pensions, pensions are worst for fraud.- Let's-- Nobody is doing anything about that.- Let's let them answer that, I think.- Yeah, well, I would respectfully say that I don't agree with what you're claiming. I think there are absolutely, we have a very strong regulatory system in this country with the PRA and the FCA. All of our financial institutions have a very high bar that they need to reach, and I can tell you from having sat on the boards of financial institutions for the last 20 years that the quality of oversight from non-executive directors on boards is of an exceptionally high level. I believe that the governance structure that we now have in this country in financial services is as good as any in the world. I'm not saying for a moment that there aren't egregious situations where certain customers end up being significantly disadvantaged, and you may very well be right in particular circumstances. There are organizations that are taking advantage of people like that. I don't think that is a common feature of our regulated industry. I think it is a feature and a risk of the unregulated financial institutions in this space, which is one of the reasons why we need to address that. I think we should.- Thank you very much. I'm afraid we're all going to have to stop so we can have a drink, but I would like to invite Loyd Grossman, who's chairman of Gresham Council, to come and close the evening.- Thank you very much, Martin, thank you. I have the awesome responsibility of standing between you and happy hour, so I'll be very brief. Firstly, I want to thank you all. In the finest tradition of Gresham, that was stimulating, challenging, even alarming, but it was a fantastic hour's performance. So thank you all very much, indeed. Will you join me in thanking our guests?- [Lord Mayor] Thank you, thank you. Thank you very much.(audience applauding)- I hope for those of you for whom this is the first experience of Gresham that it will encourage you to participate more frequently in what we have to offer. Tomorrow is Valentine's Day. And if you really want to crank up the romance, there is no better way than joining Professor Victoria Baines for her talk on the problem of encryption in IT.(audience laughs) I do recommend it. Next week, we have the first in our series celebrating the citywide tercentenary of Sir Christopher Wren, who by the way was Gresham professor of astronomy, and his successor Professor Katherine Blundell will be discussing Wren's conception of the cosmos. Next month we have Philip Mould kicking off our series on art history, talking about portraits of Queen Elizabeth II. There is a huge, huge range of subjects and activities which we consistently strive to bring you inspiration and education and entertainment, because rather like Marshall McLuhan, I think that anyone who thinks there's a difference between education and entertainment doesn't know anything about either of them. So please do come to our website and see what's on offer, and actively support us in our mission of spreading the best of learning, which we've been doing since 1597. Before we adjourn to the Livery Hall for our libations and celebrations, would you please join me in thanking the Lord Mayor, Andrew, Patrick, and Sacha, and thank you all, indeed, for joining us this evening for this special event. Thank you.(audience applauding)- [Lord Mayor] Thank you very much.- Thank you.- Thank you so much.