Financial capability: supporting healthy communities
- Better financial management equals better health
- Financial security: a social determinant of health
- How the CFEB functions
- FSA survey
- Local authority involvement in fostering financial capability
- Working with the third sector
- Issues around poverty, social living conditions and mental health
- Young people and money matters
- Process for carrying out case studies
- Further information
The following financial capability information has been produced in partnership with the Consumer Financial Education Body (CFEB), formerly the Financial Capability Division of the Financial Services Authority (FSA). CFEB leads the National Strategy for Financial Capability, in partnership with Government, industry, consumer organisations and the third sector.
In partnership with the Local Government (LG) Improvement and Development (formerly IDeA) Healthy Communities programme, we are working to:
- increase awareness of the role of financial capability
- develop capacity within local government to use financial capability to improve the social and economic wellbeing of residents
- to build confidence in local government to encourage them to work with their partners and lead the health inequality and health improvement agenda in their communities.
Better financial management equals better health
A financially capable person has the skills, knowledge and confidence to make informed decisions about their finances and knows when and where to access help. Being financially capable encourages people to be in control and take personal financial responsibility. But what is the relevance for healthy communities?
In May 2009, the Financial Services Authority (FSA) published research exploring the links between financial capability and psychological wellbeing. The findings demonstrated that moving from low to average levels of financial capability leads to an improvement in psychological wellbeing. Increases in financial capability decreases the risk of anxiety and depression by 15 per cent, it also increases life satisfaction by 2.4 per cent.
The research also found that the relationship between financial incapability and wellbeing is stronger for the divorced and unemployed, compounding the psychological harmful effects of both. Furthermore, there is a well-evidenced relationship between money problems and mental ill-health, as research shows that one in two adults with debts also have a mental health problem.
Financial security: a social determinant of health
Financial security is also recognised within the Marmot Review (which looks at health inequalities) as a social determinant of health, specifically through the concept of the ‘social safety net'. It has wider application through aspects of the policy goal of creating an enabling society and the conditions in which people and communities can take control over their lives.
This is particularly pertinent in an environment where greater financial responsibility and engagement is being asked of people, whether that is managing care needs in retirement or managing personalised health and social care budgets. Managing money and staying in control of finances is important at any time but even more so in the current recessionary climate.
How the CFEB functions
The Consumer Financial Education Body (CFEB) is an independent body, created in April 2010 by the Financial Services Act 2010. It is responsible for helping consumers understand financial matters and manage their finances better. It does this by providing impartial information, education and advice online and over the phone.
It also offers face-to-face appointments, in a number of priority areas across the UK, and from next spring, these will be available nationwide. Alongside, it runs strategic programmes that are targeted at helping people through critical stages and events in their lives.
To reach people at the right time in the right place, CFEB delivers these programmes in partnership with industry, consumer groups, professional bodies, voluntary organisations, government and the media. For example, it works in partnership with midwives, children's centres and family support workers, to distribute and promote the ‘Parents Guide to Money' and our wider advice service. This is vital to ensuring new and expectant parents feel confident they have the financial skills that are essential at this key life stage.
In 2006 the Financial Services Authority (FSA) published a baseline survey to understand the level of financial capability across the UK population. It showed that many people are poorly equipped to plan ahead, and lack the ability to make sound choices between the financial products and services available to them. In particular, the survey demonstrated that:
- large numbers of people, from all sections of society, are not taking basic steps to plan ahead - for example, they are not saving sufficiently for their retirement or putting money aside 'for a rainy day'
- the problem of over-indebtedness is not that it affects a large proportion of the population, but that when it strikes it is often severe, and that many more people may find themselves in trouble in an economic downturn
- many people are taking on financial risks without realising it, because they struggle to choose products that truly meet their needs
- the under-40s, on whom some of the greatest demands are now placed, are typically much less financially capable than their elders, even allowing for their generally lower levels of income and experience in dealing with financial institutions.
The potential impact of this level of financial incapability on health and health inequalities is recognised by CFEB which has begun to work with local government, providing resources and supporting work with children, young people and families and with adult services. There are numerous examples of local authority engagement in projects to improve financial capability through the work of strategic housing departments, adult social care and children's services. While this work is not embedded in local authorities throughout the country, the range of initiative has increased through the economic downturn.
Local authority involvement in fostering financial capability
The six case studies that follow demonstrate some of the innovative and engaging ways that local authorities are already embedding financial capability into the delivery of services in order to improve health and wellbeing.
Gloucestershire County Council has an award-winning, coordinated approach to developing financial capability in young people. Working with a wide range of partners, the council has created a resource entitled ‘The price of parenting'. It aims to help young people understand the real costs of becoming a parent.
Working with the third sector
The London Borough of Hammersmith and Fulham Council sees increasing financial capability as a way of tackling the economic determinants of health. It has formed partnerships with the third sector to produce information and face-to-face trainings for both staff and its most disadvantaged residents.
Hampshire County Council sees financial capability as an aspect of wellbeing for older people, who often say "money matters" are among their top concerns. Hampshire is working in partnership to provide information and guidance for older people not intensively using services. This is as well as commissioning money management support specifically to support older people using direct payments.
Issues around poverty, social living conditions and mental health
Poverty, debt and the conditions that go with them are major social determinants of the health and life chances of those who live with them. As part of its financial inclusion strategy, Leeds City Council has developed programmes on financial capability. These include work with young children, as well as programmes for primary schools and older children. Financial capability training is also given to council staff by the Consumer Financial Education Body (CFEB).
Young people and money matters
Plymouth City Council has partnered with Citizens Advice and other local partners to promote financial capability. This includes money advice and income maximisation, targeting particularly disadvantaged groups. The council sees this work as a way of reducing health inequalities.
West Yorkshire Trading Standards service, in partnership with Barclays Bank, is helping young people to make better financial choices. The ‘Money Skills' course, uses specially-created characters and a board game. It is delivered by a team of five in a variety of settings including youth offending teams and prisons.
Process for carrying out case studies
These case studies were written by Dr Fiona Campbell and are based on interviews with local authority staff or other project partners. They were also asked about lessons they had learned and advice they would give to colleagues in local government and the NHS who want to improve partnership working.
27 September 2016