Improving Financial
Well-being
Encouraging products that improve Financial Well-being
The July 2009 report developed the Financial Well-being Index for young workers and families.
In addition, it proposed specific product features that retail banks should offer when seeking
to address the financial well-being of their customers.
The research carried out for that report did not cover the poorest or wealthiest in UK society or all
age groups, but it is considered to be relevant to some nine million people with a gross household
income in the range of £15,000 to £60,000 and who are aged between 18 and 39. It is highly relevant
to young people who are new to the workforce and to families with young children. These are both
groups in society where money management is important; young people as their finances can take
a step-change in complexity, and families with young children as having children is often linked with
the pressures of losing one income or moving home.
Savings, credit card
and current accounts
have been reviewed
to give them a
FairBanking rating
The key factors driving the Financial Well-being Index contained in the report were as follows:
Factor 1 Assist customers with the control of their money;
Factor 2 Assist customers (particularly younger customers) with “thinking of their money
in pots for different purposes”;
Factor 3 Assist customers (particularly families with young children) to adjust their
expenditure on non-essentials when life events occur;
Factor 4 Assist customers with having plans to reduce debt or increase savings.
This research identifies products in the UK with features that are likely to drive the above factors.
Savings, credit card and current account products have all been reviewed to seek out the best that is
available and to give them a FairBanking rating. This research is a ‘first-step’ and its primary purpose
is to establish a methodology to rate products and to establish whether rating products according to
their contribution to financial well-being is possible. The features analysed include alerts/messages,
particularly of balances, setting savings goals, debt repayment plans, budgeting, incentives and
disclosure of customer research.
Most of the products that receive a positive rating have come into being in the last two years; indeed
many have emerged only in the last year. At first sight, it is not an optimistic picture as most ratings
are at a one-star level (out of the five stars that are available). However, one institution achieves a 3-star
rating for a product, the Saffron Building Society’s “Goal Saver” account. Nevertheless, in the last year
there have been some positives. Barclaycard, for instance, has improved the service offered through its
website, mybarclaycard, and shows signs of setting an example for other credit card providers. The mobile
phone operator, O2, with its Cash Manager product, has launched a card that has overtly marketed its
“control” features; it is setting an example to the main providers of current accounts.