Hands up if you know an ISA from a Bunsen burner

Around 15 per cent of 18 to 24- year-olds think an individual savings account (ISA) is an iPod accessory, and one in 10 reckon it's an energy drink. As the new school year begins, these findings from insurer Prudential show that while exam results may be improving across the UK, there's a glaring gap on the curriculum: financial literacy.

With rising personal debt levels in Britain, and a lack of long-term savings, better money management seems a pressing issue. But both government and schools have been slow to act and families are also floundering. A new survey from National Savings & Investments (NS&I) reveals that while parents believe in financial education, more than a quarter have not discussed money matters with their children. According to the research, they would rather discuss the facts of life than credit cards and debt.

One of the reasons parents put off talking to their children about money matters is that they do not feel comfortable explaining some of the concepts. As the survey reveals, a third have "just picked up" their financial knowledge without gaining a full understanding. And if they can't enlighten their kids, this cycle looks in danger of continuing.

However, it's not all bad news as some groups are working to change this.

Earlier this month, for example, Prudential announced that it was funding a central team to help develop financial education services across Citizens Advice Bureaux.

Elsewhere, the Personal Finance Education Group (Pfeg), a charity, has long campaigned for an improved service in the classroom. "In the past, financial education has been left to chance," says chief executive Wendy van den Hende. "But things are slowly shifting and it does now have a higher profile."

That profile now seems to be extending to the Government, which has made moves to include financial capability "more explicitly" in the maths curriculum - teaching it in the context of day-to-day life, for example.

The Department for Education and Skills has also set guidelines for how personal finance can be taught as part of the citizenship and personal, social and health education curriculum.

The problem is, says Ms van den Hende, that there are no sanctions in place if schools choose not to teach it - and for many teachers, the subject is outside their comfort zone.

This issue was highlighted in a recent review of the range and effectiveness of financial education by the Department for Work and Pensions.

In its report, it said that financial education's status as a non-statutory subject meant provision can depend on the outlook of individual schools, how highly staff prioritise it, and the confidence of teachers.

And that unstructured approach shows no sign of changing in the near furure because there are no firm plans to make personal finance a compulsory part of the curriculum; nor are there plans for a national assessment in the form of a GCSE or A-level.

But this has not stopped the Institute of Financial Services (IFS) developing its own range of qualifications, equivalent to an A-level and AS-level.

"The certificate [AS-level] has been running for three years and there are now nearly 100 schools and colleges offering it," says IFS spokeswoman Doro- thy Wood. "The diploma [A-level] is being piloted in 10 schools and the feedback has been excellent."

From the start of this month, the IFS has also been piloting a foundation certificate in personal finance for 14 to 16-year-olds. "This teaches students how to manage their money," she adds. "It prepares them for adult life so they don't have to learn the hard way."

Ms Wood does not want this qualification to become compulsory, but she would like all students to have the choice to take it.

Industry body the Association of Investment Trust Companies (AITC) is heavily involved with the issue and has been calling on the Government to create a special Financial Education Agency. This, it says, would co-ordinate the delivery of financial education across the UK, working with local pro- viders, setting priorities and arranging funding.

"Finance education is recognised as an idea whose time has come," says AITC director-general Daniel Godfrey. "A lot of good work has already been done, but it's going to need a quantum leap to move from these pilots to rolling it out on the scale required."

He says the missing link is time and resources - which must be set aside. "An agency with a ring-fenced budget and funding from the industry and government would ensure focus and follow-through are maintained."

This would be of great benefit to groups such as Pfeg, which relies on funding to continue its work. "If we don't target children at school, when they are a captive audience, then it is a real missed opportunity," says Ms van den Hende. "But at the moment there is a large hole to be filled."