Hello our readers.
After a series of previous blog posts on financial consumer protection, here we introduce you more issue-specific posts. For this and the next two posts, ‘financial education and literacy’ will be addressed. Financial education is at the core of financial consumer protecting, allowing consumers to have appropriate knowledge at all stages of financial services.
First of all, let us find out how ‘financial education’ is defined by the OECD. Financial education can be defined as the process by which financial consumers/investors improve their understanding of financial products, concepts and risks and, through information, instruction and /or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being.
If you assume that financial education is just about the provision of financial information and advice, you may go beyond the assumption. Financial education should contribute to ‘financial capacity building’ in a fair and unbiased manner.
To promote such education, what does financial institutions do? The role of financial institutions in financial education should be promoted and become part of their good governance with respect to their financial clients. In terms of accountability and responsibility, financial institutions are to not only provide information and advice on financial issues, but also in promoting financial awareness clients.
For the issue of education in practice, financial programs should be designed to meet the needs and the financial literacy level of their target audience. Moreover, such programs should be able to reflect the target audience’s preference to receive financial information.
Financial education is increasingly important, with the increased complexity of markets, varying needs of at different life stages, and increasingly complex information these days. Accordingly, financial education should be sought at all stages of individual’s life, which is life-long, on-going and continuous process.
It is of no use to repeatedly mention how important financial education is. Then, shall we move on ‘how to improve financial literacy’ for the next blog post?