Educate to reduce insolvencies urges ifs School of Finance

Financial education charity the ifs School of Finance, has warned that there will continue to be high levels of insolvency whilst so many people lack basic skills in personal financial management.

The comments follow the release of Q2 statistics by the Insolvency Service. These statistics show that there were 24,553 individual insolvencies in England and Wales in the first quarter of 2008 on a seasonally adjusted basis. This was a slight decrease of 2% on the previous quarter.

Phil Hall, Head of Public Affairs at the ifs School of Finance, said: "Levels of consumer debt have been at dizzying heights for several years, causing many to face insolvency. Once again it looks as if there will be over 100,000 insolvencies in 2008 if current trends continue. In fact, falling levels of employment together with rising mortgage, food and energy prices mean that these numbers could grow considerably in the months ahead. By equipping the public with the skills, knowledge and confidence to manage their finances effectively, the number of insolvencies would inevitably be reduced."

The ifs School of Finance is currently the only provider of GCSE, AS and A level equivalent qualifications in personal finance. Their Foundation & Intermediate Certificates in Personal Finance, Certificate in Financial Studies and Diploma in Financial Studies are being taken by over 10,000 students this year alone.

In March 2008 these qualifications were praised by Ofsted, the Government schools inspectorate, as achieving good learning outcomes. Similarly, an independent study by the University of Manchester found that 95% of students taking an ifs School of Finance qualification in personal finance were able to manage their finances effectively.

Hall added, "There are lots of other different financial education programmes being offered in schools, workplaces and online but, as FSA research highlighted last month, there is little or no evidence to suggest it is improving people's financial capability. In contrast, there is an increasing body of evidence to suggest that a standalone, nationally recognised qualification produces financially capable young people.

This evidence-based approach means we are lobbying policymakers to add a standalone qualification in personal finance to the core school curriculum. This would put personal finance on an equal footing with other subjects such as Geography, History and Modern Foreign Languages - compulsory for schools to at least offer personal finance as a GCSE or equivalent option. Doing so would lead to a step change in the number of people able to manage their finances, in turn this would have a knock on effect in reducing insolvencies."

For further information about the ifs School of Finance, visit financialcapability.co.uk