You may have noticed that this month that FSCS has refreshed its programme to raise awareness of our protection for deposits.
Most people are saving up for something special: holidays, weddings, doing up the house and so on. Our message that, thanks to FSCS protection, their money is completely safe in bank, building society and credit union deposits is especially relevant to them.
It’s a message we particularly want to get across to younger people. That’s why we’re working with a number of well-known personalities who can talk first-hand about the importance of saving, and hence FSCS protection, in their own lives. Check out, for example, what Fearne Cotton has to say about her savings story here.
FSCS is not raising awareness for its own sake. We only do so where lack of awareness of FSCS protection risks consumers’ own well-being or financial stability.
Building awareness of FSCS contributes to consumer confidence, as independent research shows. That means it also benefits the industry. The costs are being borne by the deposits sector and have their backing.
In the case of deposits, the risk is to stability. At times of stress, people who don’t know their money is protected are much more likely to try to pull it out of a bank, building society or credit union thought to be in trouble. Think Northern Rock.
Runs of that kind just make liquidity problems worse. What’s more, panic itself is contagious. So, raising awareness of the Scheme is investing in the consumer confidence that can help to avert such a run.
Our marketing is only one part of our strategy to raise awareness and our budget is correspondingly modest; this year we are spending about £3m on our consumer awareness programme.
One of our main costs, media buying for advertising, benefits from the buying power of Government. We use the Government’s media buying agency to help us achieve lower costs than we could achieve on our own given our modest level of spend. In effect, that greater spending power makes our budget go further.
We see our own marketing as essentially supportive of the much wider efforts of the industry which we expect to do much of the heavy lifting.
After all, the industry is in contact with millions of its customers day-in, day-out in branches, on websites and through its own marketing. We rely on the industry to use its contacts with consumers to help reinforce the FSCS protection message.
We have a growing and very productive partnership. The bedrock is the mandatory requirement on all banks, building societies and credit unions to display information about FSCS protection. Research shows that this plays a vital role in promoting awareness of FSCS along with our marketing and PR.
But, with our support, some firms are going well beyond this because they recognise that FSCS protection provides important reassurance to consumers.
To help those firms which do want to do more, we are launching a new FSCS badge. This has been incorporated into consumer advertising, and you can see a great example of how we have incorporated it into a short animated film, ‘About FSCS’ here.
We look to banks, building societies and credit unions increasingly to incorporate the badge into their own marketing of relevant products. We’d like to see it become the norm as a visible token to consumers that they have, and can rely, on FSCS protection. This is akin to ATOL.
The third leg is our strategy is to exploit relevant opportunities to raise awareness of our protection among opinion formers and through interviews on radio, television and in the press. We do this through our own work and by working with a PR agency at an annual cost of around £180,000.
For example, when next year, as a result of EU legislation, our protection extends to what are known as “temporary high balances” – the result of house sales, or legacies or insurance pay-outs, for example - we shall want to explain the implications to consumers.
We shall also need to explain the scope of FSCS protection to people who, from next April, want to take advantage of liberalisation of retirement saving which the Chancellor announced in Budget 2014.
Needless to say, we track every quarter the impact of our work to raise awareness and the contribution made by different legs of our strategy.
I’m pleased to say that 62% of consumers are now aware either of FSCS itself or of the existence of a protection scheme. That’s up from less than 20% five or six years ago.
So we have made significant strides.
We also know that the different legs of our strategy – our own marketing, the industry’s efforts and PR – each work together to help drive up awareness. The results show this integrated approach is critical to achieving our long term target of 70% awareness.
We still have a little way to go before we hit the 70-80% awareness level achieved by our sister organisation, FDIC, in the United States. That will be challenging but, thanks to hard work and our partnership with the industry, we’re well on the way to towards that – and at a modest cost to the levy payer.