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Call for mandatory bank accounts for 16 year olds

Call for mandatory bank accounts for 16 year olds

Category: Banking

Updated: 14/12/2012
First Published: 31/01/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Government is facing calls to help youngsters better understand their finances by giving all 16 year olds a bank account.

The scheme would work by giving 16 year olds a bank account when they receive their National Insurance number, said Simon Culhane, chief executive of the Chartered Institute for Securities & Investment (CISI).

Making personal finance a more important part of the national curriculum has also been urged.

A system whereby a 16 year old only has to complete one form to decide which bank they would like to join has been raised.

Mr Culhane said the initiative would help children understand personal finance at a much younger age, especially as online payments and transfers become more popular.

The suggestion comes after last month's debate in the House of Commons about making finance lessons a bigger part of children's learning – a proposal which garnered support from all parties.

There are worries that children are not being suitably prepared to deal with their finances.

Within families, about 19% of parents have never discussed with their teenagers how to spend money and 32% have yet to talk about how to budget, or even describe what one is, while only 36% of people understand that the term APR relates to interest payments.

"No wonder that we are seeing a proliferation of payday loans whose interest rates are close to usurious and make the interest rate charged by a bank for unexpectedly being overdrawn look a bargain," said Mr Culhane.

Currently, aspects of personal finance are covered in the personal, social health and education module taught in schools, but there are no exams to take.

The CISI says the current system does not go far enough and is 'almost universally derided by pupils and teachers alike'.

"Financial education is too important to be tagged on as an also-ran; it should be fully integrated into the maths syllabus and tested," added Mr Culhane.

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