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Money and Pensions Service calls for banks to promote customer wellbeing

A report from the Money and Pensions Service (MPS) has called for retail banks to promote the wellbeing of customers.

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Based on interviews with employees across 19 banks, building societies, fintechs and one credit union, the MPS’s report found that while the sector has made progress with good-practice features built into current and savings accounts, there is room for improvement and greater take-up across the sector.

 

Currently, around nine million people in the UK are facing problem debt, while some 11.5 million do not even have £100 in savings. The MPS said a further 24 million people do not feel confident making decisions about financial products and services.

 

As such, the MPS called on banks to put customers’ financial wellbeing at the centre of their corporate purpose and to ensure their products and services include features to help people improve their ability to manage their money better.

It highlighted:

  • The ‘pots’ saving feature in the Monzo banking app, where customers can set money aside for bills or a particular savings goal, name the pots after the goal and set a target amount. Customers can also set rules to automatically move money in and out of the pots.
  • Metro’s Insights app is an AI-powered money management tool enabling customers to keep track of the amount they spend by category, such as ‘transport’, ‘shopping’, ‘eating out’. This analysis may prompt customers to think if these habits are best use of their money and to consider adjusting spending.
  • The Plum mobile app includes a feature that lets customers know when they could save money on their energy bill, amongst other expenses, by monitoring what customers pay each month and cross-checking this with tariffs for UK suppliers.

The report found:

  • Improving customers’ financial capability should be a strategic goal; providers should consider this as part of building the business case for new products, services and features;
  • Financial capability should be integral to the design of products and services, as well as evaluation; and
  • The sector should work together to drive a cultural shift around money in society.

Sir Hector Sants, chair of the Money and Pensions Service said: “Money is a fundamental part of life and is central to people’s health and wellbeing. A population that can manage their money and pensions well is essential, and the retail banking sector has a critical and central role to play in moving the dials for the UK population. It is time for the sector to take a much more proactive, holistic approach to financial wellbeing, shifting the balance from the cost of remediation to investment in prevention.”

 

“We encourage the sector to work with us to develop and implement the changes needed to improve people’s financial capability, as well as rebuilt trust and confidence in financial services.”

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