Financial Literacy and Over-Indebtedness In The United Kingdom
Lead Research Organisation:
University of Nottingham
Department Name: Sch of Economics
Abstract
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People |
ORCID iD |
| John Gathergood (Principal Investigator) |
Publications
Alban Webb (Author)
(2011)
Financial Literacy and Indebtedness: New Evidence for UK Consumers
Gathergood J
(2012)
Self-control, financial literacy and consumer over-indebtedness
in Journal of Economic Psychology
Grahame Thompson (Author)
(2012)
Financial Literacy and Consumer Credit Use
John Law (Author)
(2012)
Self-control, financial literacy and consumer over-indebtedness
John Law (Author)
(2012)
Financial Literacy and Consumer Credit Portfolios
Karel Williams (Author)
(2012)
Self-control, financial literacy and the co-holding puzzle
| Description | Consumer understanding of basic concepts in finance is essential is consumers are to thrive in the modern financial market place. This research project has measured consumer 'financial sophistication' using research tools from which numerical measures of an individual's understanding of basic concepts in finance such as interest rates can be measured. Findings show that consumers who do not understand basic concepts in finance are more likely to use high cost borrowing products such as payday loans, are more likely to get into problems repaying their debts and are also more likely to make financial mistakes. These findings have been shown for representative samples of UK consumers. However, the project has also discovered that if individuals lack basic financial understanding then money advice providers, such as Stepchange and Citizen's Advice can be a source of help to make up for what consumers do not know. Our research shows that consumers with poorer understanding of financial concepts are more likely to seek advice if they face a financial problem. The research suggests that financial advice can be a form of 'safety net' for consumers who do not properly understand their financial decisions. |
| Exploitation Route | The findings from this project have already been incorporated into consumer financial protection policies implemented by the UK government. The research has produced core insights which are essential for policymakers buy also extremely beneficial to consumer finance service providers seeking to make their products understandable and attractive to consumers. |
| Sectors | Digital/Communication/Information Technologies (including Software),Education,Financial Services, and Management Consultancy,Government, Democracy and Justice,Retail |
| Description | The findings from this work have been used extensively by public policy bodies and the third sector. The principal investigator was invited by HM Treasury to author a series of reports on credit counselling in the UK until the umbrella title 'Demand, Capacity and Need in the UK'. In addition, the lead author has provided expert testimony to the Department for Business Innovation and Skills Select Committee inquiry into Debt Management and the Treasury Select Committee (forthcoming 18 November 2013) on initiative to promote financial education and financial literacy among consumers. the principal investigator has also worked extensively with the FCA on a series of projects related to consumer sophistication and choice. |
| First Year Of Impact | 2011 |
| Sector | Financial Services, and Management Consultancy,Government, Democracy and Justice,Retail |
| Impact Types | Societal,Economic |
| Description | Letter From Project Partner CEO |
| Organisation | Money Advice Trust |
| Country | United Kingdom |
| Sector | Charity/Non Profit |
| PI Contribution | Letter from the CEO of the Money Advice Trust. |
| Start Year | 2010 |
| Description | Demand, Capacity and Need for Debt Advice in the United Kingdom 2011 Presentation |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Primary Audience | |
| Results and Impact | Presentation of Findings |
| Year(s) Of Engagement Activity | |
| Description | Demand, Capacity and Need for Debt Advice in the United Kingdom 2013 Interim Presentation |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Primary Audience | |
| Results and Impact | Presentation of interim findings |
| Year(s) Of Engagement Activity | |
| Description | Developments in the UK Economy and Money Advice Forecasting |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Primary Audience | |
| Results and Impact | Lecture delivered to Financial Conduct Authority Money Advice Group |
| Year(s) Of Engagement Activity | 2013 |
| Description | House of Commons Business, Innovation and Skills Committee 14th Report 2010-12 'Debt Management', Oral Evidence |
| Form Of Engagement Activity | A formal working group, expert panel or dialogue |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Policymakers/politicians |
| Results and Impact | Record of Oral Evidence provided to be Committee including that of the Principal Investigator. |
| Year(s) Of Engagement Activity | 2013 |
| Description | House of Commons Business, Innovation and Skills Committee 14th Report 2010-12 'Debt Management', Supplementary Written Evidence |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Policymakers/politicians |
| Results and Impact | Supplementary Written Evidence provided by the Principal Investigator. |
| Year(s) Of Engagement Activity | 2013 |
| Description | Presentation at Consumer Credit and Bankruptcy Conference |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Primary Audience | |
| Results and Impact | Presentation delivered by Principal Investigator at 'Consumer Credit and Bankruptcy' Conference hosted by Cambridge Financial Analysis and Policy research group |
| Year(s) Of Engagement Activity | |
| Description | Presentation at Financial Literacy, Saving and Retirement in an Ageing Society' Workshop |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Primary Audience | |
| Results and Impact | Presentation of 'Financial Literacy and Consumer Credit Portfolios' paper (later published in Journal of Banking and Finance, see output) at 2-day workshop hosted by CeRP, Collegio Carlo Alberto 17-18 September 2012 |
| Year(s) Of Engagement Activity | |
| Description | Presentation to Consumer Credit Counselling Service |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Primary Audience | |
| Results and Impact | Presentation at a 1-day workshop of key findings from the first-stage of the project. |
| Year(s) Of Engagement Activity | |
| Description | Seminar at Keele University |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Primary Audience | |
| Results and Impact | Seminar delivered by Principal Investigator at Keele University Economics Department |
| Year(s) Of Engagement Activity | |