Having acknowledged the need for financial education, the OECD examined member countries’ financial literacy and suggested measures to improve financial literacy. This non-binding recommendation is applicable to all countries, whether the developed or the developing, as long as a country is interested in designing and implementing effective financial education programs.
Being based on the actual experiences of the OECD countries, the recommendation encourages the role of all the main stakeholders in financial education. Namely, the main stakeholders are; governments, financial institutions, employers, trade unions and consumer groups.
Recommendations on Principles and Good Practices for Financial Education and Awareness
- To promote unbiased, fair and coordinated financial education
- To start financial education at school, for people to be educated at early stage of life
- To make financial education become part of the good governance of financial institutions
- To make financial education be clearly distinguished from commercial advice
- To make financial education particularly focus on important life planning aspects, for example, saving, debt, insurance or pensions
- To encourage and check that financial consumers read and understand information, especially with regards to long-term commitments or financial services with potentially significant financial consequences
- To build financial capacity, appropriately targeted and personalized
- To provide future retirees with the access to financial adequacy of pension schemes
- To provide proper information and warnings on high-risk issues for financial consumers
What is expected, if these recommendations are carried on? Individuals will be less likely at risk of financial fraud, as they become financially literate. They will be able to choose the right financial service for their own needs. Finally, individuals are to challenge financial service providers to improve and therefore design financial services responding to consumers’ needs. This feedback will contribute to positive effects on both investment levels and economic growth. That is why financial literacy is being spotlighted with the international-scale attention.
For the next post, Let us move on to ‘Good Practices’ for financial education and awareness! Please keep your eyes on our blog post.