Never too old to learn

Educating schoolchildren about personal finance has been a main consumer aim of the Government and its City regulators over the last couple of years. But now they are switching to a tougher target - adults.

An 'interactive adult learning program' will be available, free, on the Financial Service's Authority website by spring. Instead of just giving out facts about retirement planning, for instance, people will be able to test their understanding by trying to answer a few questions. The FSA has decided to go down this route because it has discovered that interaction is a far better learning tool than just providing information.

And it believes that there is a need to help adults make better decisions about mortgages, pensions and other financial products. 'The level of understanding is not good,' says its head of consumer education Deborah Arnott. She quotes research suggesting that 20 per cent of people approaching retirement believe that pensions are not taxable and that 40 per cent of 18 to 24-year-olds rely on friends and family for personal finance advice.

But even without the FSA's program, there are many sources of help for adults. On pensions, the Occupational Pensions Advisory Service (OPAS) runs a free helpline and the TUC also runs a pension helpline. Trade bodies such as the Association of Unit Trusts and the Association of Investment Trust Companies also produce leaflets, although people will have to remember that they have a vested interest in promoting these products. But the FSA is now trying to go a step further in spreading the word to the adult population, because it believes that publicising the availability of information is probably a tougher task than getting people, once they have the information, to understand the issues.

The FSA is now trying to encourage employers to distribute personal finance information. It hopes that more will follow the example of Sainsbury's and MBNA, the credit card bank. Sainsbury's, which is worried by the fact that 70,000 of its 170,000 staff are missing out on employer's contributions by not joining the pension scheme, has started personal finance help sessions for employees.

MBNA meanwhile has a financial education service manager, Harper Wright, who has had individual sessions with 400 of the company's 2,500 UK staff. The advice is generic. It explains, for instance, the different types of mortgages or pension schemes. Other employers might wonder what Sainsbury's and MBNA get out of this. Wright says: 'Our chairman asks the question "where will my people go for advice?" There is no longer a high street bank manager around to talk to. If people are not worried about whether they have the right mortgage, they are going to be a better employee.'

The FSA will be trying to encourage other employers to take this route. If employers are providing stress counselling, the FSA believes they could do more in this arena. 'Why not provide counselling on personal finance?' says Arnott. The main focus for employers at the moment is retirement planning, but this is usually confined to employees who are a few months off retirement. 'You need to reach them when they are making their initial decisions, such as taking out their first mortgage or starting a pension,' she says. Employers will be forced into thinking through these issues to some degree next year when they have until October to arrange access to the new 'stakeholder pensions'. The FSA is looking to the US where evidence from the National Bureau of Economic Research suggests that 88 per cent of businesses which run a pension scheme also provide some sort of financial education programme. 'The thing that really works is seminars,' says Arnott.

Employers in the UK will worry about just how much advice they can give to staff. The personal pension mis-selling scandal of a decade ago was partly exacerbated by the constraints on employers not to recommend their own pension scheme when employees decided to transfer out into a personal pension. 'That was a real cloud that hung over many employers,' says Peter Clarke, president of the Institute of Actuaries.

Another problem for employers will be how to answer the questions of employees. Some employers are concerned, for instance, about staff who are completely financially bound up with them - through the pension scheme and by holding the company's own shares. If an employer suggested that such an employee should diversify and invest elsewhere, the employee's next question is likely to be 'How?'

Some employees might also wonder about the reliability of information provided at work.

After all, some employers have invited personal pension sales staff into their premises and thereby aided the handing out of some bad financial advice, such as opting out of the State Earnings Related Pension Scheme, Serps, for example, in cases where this was a bad move. Government and regulators are considering these and other difficult questions.

The FSA, having got personal finance on to the school curriculum this September, will now have to push to encourage teachers to take up the subject. In the workplace, parts of the infrastructure are also already there, says Alan Grant, the former TUC head of education who now works in consumer education at the FSA. He says: 'There are computer resources in the workplace that could be turned over to help people with their learning. It takes a push.'

FSA helpline , 0845 606 1234; website, www.fsa.gov.uk; OPAS helpline, 020 7233 8080; Association of Unit Trusts and Investment Funds: leaflet orderline, 020 8207 1361; website, www.investmentfunds.org.uk; Association of Investment Trust Companies, 020 7431 5222; website - www.aitc.co.uk.