At Royal London, we are committed to helping our customers improve their financial capability – that is, their ability to understand and manage their money.
Improving financial capability
This involves us thinking about ways we can empower people to build the right financial skills and knowledge to make good decisions and the most of their money; by providing easy-to-understand information such as checklists, guides, and articles alongside ongoing customer support, we aim to help our customers manage their money on a day-to-day basis, prepare for significant life events, and deal with periods of financial difficulty.
A large proportion of UK adults are not managing their money well day-to-day. And only 20% of the most vulnerable are keeping up without difficulty.
Research by the Money Advice Service in 2015 showed that:
- 19 million people don’t have an approach to budgeting that they feel works
- One in five people cannot read a bank statement
- Four in 10 have less than £500 in savings to cover an unexpected bill
- Only half of families have life cover
- Around 8 million have problems with debt - and of those, only one in six is seeking help.
Why financial capability is important to Royal London
We know that the world of money can be baffling and bewildering for many people. Our aim is to build financial capability by using the expertise of specialists across the business to help our customers and members navigate the world of personal finance with confidence and manage their own money effectively.
There are three main reasons why we feel it’s important to support our customers when it comes to understanding and managing their financial options:
Three steps - Support, Empowerment and Social concern
As a mutual we think it's important to go the extra mile and support our customers with their broader money management.
By empowering people to take control of their day-to-day money, we hope that this will allow them to take a longer-term approach to their finances.
Low financial capability is of general social concern. As a major player in the financial services industry this matters to us from a social impact perspective.
What we’re doing to help
In order to help our customers while aligning with this strategy, we have a number of ongoing initiatives underway, including:
We regularly use the national media to highlight and raise awareness of areas where people are not claiming the help they may be entitled to.
In 2018 we highlighted how thousands of parents across the UK are falling foul of the high income child benefit charge and as a result will unwittingly suffer from a lower state pension when retiring. We launched a petition to call on government to contact those affected and to backdate their child benefit claim. Over 13,000 people have signed the petition so far and we continue to campaign on this issue.
The fifth Royal London National Funeral Cost Index revealed that funeral debt in the UK is at £131 million, with people taking on an average of £1,744 of debt to pay for a funeral – an all-time high. We believe more support needs to be offered to families struggling to pay for funeral costs and we are campaigning for the level of social fund funeral grants to bear more relation to the actual costs of funerals.
We use our voice to campaign for social issues and we have had a powerful reach - there were more than 400 million ‘opportunities to see’ these campaigning stories in national, regional and broadcast press in 2018.
Supporting our customers
Last year focussed on helping those facing the loss of a loved one by creating an online bereavement hub. We chose bereavement because research tells us that life events such as these can have a big impact on someone’s financial capability. Combine that with the fact that we process many thousands of life insurance claims a year, and we have the perfect opportunity to provide timely help and support to people who need it.
We have also carried out research among our customers to see if using a budgeting app could help them manage their money better. Nearly 800 people took in our "Looking after the pennies" study which revealed that for many people the very act of budgeting, regardless of the method and tools used, can help them manage their money and make savings.
Good with your money guides
One way we seek to do this is through our Good with Your Money guides. In 2018 we published three new editions to help people:
- The new State Pension – your questions answered
- Power of Attorney explained
- How to make sure the right person gets your pension when you’re gone
We also produced a guide for parents thinking about helping their children get on the property ladder.
At the start of 2017, we published the results of a study of 800 of our customers looking at whether using various budgeting tools could help them manage their money better day-to-day.
The team also carried out in-depth interviews with some of our bereaved customers to understand the financial issues they faced in the weeks and months after the death of their loved one and what help they would have found useful.
This will include piloting two new guides: one with useful sources of help and support when someone dies, and another aimed at encouraging people to plan ahead for death.
Our Director of Policy, Steve Webb, acts as the pensions ‘agony aunt’ for the This is Money website, writing a weekly column in response to reader questions. We also make sure that our regular emails to members include articles to help them better understand their finances.
Our campaigning stories had 400 million opportunities to be viewed by you.