03/07/2012 05:30 BST | Updated 01/09/2012 06:12 BST

Bank of Mum and Dad Showing Remarkable Growth

There's a thrusting new brand on the market. In a week when the government announced plans to scrap housing benefits for under-25s, the Prime Minister enthused about Hotel of Mum and Dad. Now research conducted by Magnified Learning and Legal & General reveals a member of the same group, Bank of Mum and Dad, is also showing remarkable growth.

It may be nothing new for young people to tap their parents for the occasional hand out and hand up; it's a different matter when, as the research shows, children of 50 are relying on Mum and Dad for the basics.

The findings seem to predict a strong outlook for Bank of Mum and Dad and the Mum and Dad Group in general. For instance:

40% of 35-54 year olds have been given money by their parents in the last year, receiving £1,030 on average, with the top three items borrowed for, all falling into the category of essential:

Rent £2,044

Fare for bus/train to get to work £1,880

Help buy house/flat £1,844

Yet our research has exposed the fact that Bank of Mum and Dad is, at first sight, scandalously unfit to provide advice about even the most basic financial decisions:

39% of parents do not feel competent at advising their children about bank accounts

66% of parents do not feel competent at advising their children about investments

58% of parents do not feel competent at advising their children about pensions

Quite brilliantly, though, it's this very lack of competence that looks set to yield sustained growth for the Mum and Dad Group.

This is how it works:

Over 80% of children turn first to their parents for financial advice - we know this both from our research and a study carried out earlier this year by IPPR.

Bank of Mum and Dad proceeds to give these children incompetent advice on a range of fundamental financial matters.

Their children make ill-advised financial decisions on the back of this advice, plunging them into financial difficulties and forcing them back into the arms of the Bank of Mum and Dad, and with a little luck the Hotel of Mum and Dad too. Like I said, brilliant!

But it gets even better. Changes to the National Curriculum mean space for financial education is being seriously squeezed; the Money Advice Service, another avenue open to citizens seeking free financial advice, is under review; and from January 2013 with the implementation of the little known and little publicised Retail Distribution Review, we will all, in effect, lose access to free independent financial advice.

It doesn't take much insight to see that, before long, existing customers of the Group will themselves be franchisees of the Mum and Dad Group, offering their own children ill-founded financial advice, interest free or non-repayable handouts, and low cost accommodation. It really is a terribly sustainable model.

In an effort to stem the growth of this powerful new Group, Magnified Learning is working in partnership with established players in the financial services sector such as L&G, Bluefin, St James's Place and BNY Mellon. This involves taking their employees into schools to develop children's financial competence particularly in the areas of saving, borrowing, budgets and pensions. Maybe the nation's estate agents and letting agencies would like to join us!