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Tuesday, November 21, 2006

Lessons in Finance

George Osborne, the Shadow Chancellor, is calling for children to be given lessons in finance and money management.

The lessons would include life relevant areas such as, how to calculate rates of interest and how to balance a budget to prevent levels of debt from worsening.

The lessons are, in the opinion of the Conservatives, necessary in order to address the spiraling level of indebtedness of the British public.

Mr Osborne presented his suggestion during the third "debt summit" held by the Tories this year. The summit was attended by leading figures from the financial services industry, consumer protection bodies and charities.

The Tories have quite a challenge ahead of them, whilst it is true that people should take responsibility for their own finances, they are faced with the aggressive marketing of all manner of financial products. It is not unreasonable to call on the financial services industry, which has sullied its reputation over the last few years (with its appalling response to the endowment mortgage crisis), to act in a responsible manner when lending money.

Citizens Advice has agreed to work with the Tories to help people achieve a better grasp of financial matters.

The Conservatives have also asked the Advertising Standards Authority to investigate whether some companies, encouraging people struggling with debts to sign IVAs, were in breach of its advertising code.

Mr Osborne said:

"Like many consumer groups and banks, I am concerned that people may be being encouraged by unscrupulous IVA companies to commit to IVAs, even where this may not be the right course of action.

And I'm also concerned that companies aren't always properly informing their customers about the fees they charge for arranging an IVA, or about the adverse effects of IVAs on credit ratings
."

The trouble that all the politicians face, whatever party they belong to, is that Britain relies on the debt burdened consumer to fuel the economy. Unnerve the consumer too much, and you have a recession. It is a delicate balancing act.

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