Albania - Building our future through Financial Literacy

In September this year the Bank of Albania hosted its 9th international conference and chose financial literacy as the theme.  The one day conference was opened by the Governor of the Bank of Albania who described financial education as a contributor to Albanians’ financial welfare and urged his country to ‘develop a national strategy on contemporary financial education’ and said the Bank was ready to join this initiative. 

The key note speaker was the Governor of the National Bank of Serbia who said the Bank was in the processes of introducing a Financial Education Strategy (2011-2015), ‘to provide a more adequate way for our citizens, entrepreneurs, farmers, schoolchildren and students to obtain information that are of significance for them both currently and in the future’. 

Other contributions came from the senior representatives from central banks of Italy, Poland and the Czech Republic as well as the Money Advice service in the UK.

Australia - Proposed New Australian Credit Card Reforms

The Australian Labour Government is proposing tougher protection for credit card users and better transparency in their contracts with credit card companies. Among the changes predicated to come into effect in July 2012 are a ban on charging over-limit fees unless the customer has agreed that their account can go over the limit, a ban on unsolicited credit offers unless the customer has agreed to receive them and a clear summary of the card’s features must be provided by the lender before a contract is signed.

The changes will radically alter the information given on credit card statements to card holders. Customers will have to be given information on:

1. How much they will have to pay in extra interest payments by only paying the minimum amount
2. How many years it will take them to clear their balance if they only pay the minimum amount
3. How much interest they would save by paying more than the minimum payment and how much quicker this would clear the debt
4. The complete charges by the credit card provider if the customer fails to make a payment by a certain date

It is estimated that Australian households collectively paid more than $523 million in interest changes to credit card providers in January 2011 alone.

Similar rules apply in the USA through the Credit card Accountability, Responsibility and Disclosure Act which is credited with provoking a significant increase in repayments by credit card customers.

The New Zealand Commission for Financial Literacy and Retirement Income is calling for similar reforms in this country.

Canada - Aboriginal Financial Literacy in Canada

In February 2011 a research report was released that canvasses the financial literacy issues for the Aboriginal population of Canada which in 2006 census accounted for about 4 per cent of the Canadian population (1.2 million people).  The report was prepared for the Canadian Task Force on Financial Literacy.

Apart from the common experience of dispossession and federal administration, there is little that unites or is common to all Aboriginal people in Canada. The Aboriginal community displays a wide range of cultural, linguistic, demographic, historical, and geographic characteristics (many of which predate contact) and an even wider range of legal, administrative, financial, and economic circumstances, all of which influence how financial literacy issues play out.

‘Aboriginal Financial Literacy in Canada: Issues and Directions’ by Dominique Collin describes how Aboriginal individuals, entrepreneurs and communities have been affected by financial literacy challenges in many of the same ways that lower-income people and remote populations in Canada have. However, there is the additional weight of specific cultural and structural barriers and the additional pressure of unprecedented opportunities to participate in the financial life of the country after generations of exclusion. Cultural barriers such as language, values that affect financial decisions, the persistence of noncash-based economies, lack of trust toward financial institutions, and habituation to government program management culture all affect financial literacy. Structural barriers include the huge education, literacy and numeracy deficit, geographical remoteness, and the lack of access to basic banking services.

The paper describes how solutions and best practices fall into two categories. First, culturally adapted and relevant training has been developed and shown to be effective. Among training efforts, certification programs for financial management experts stand out, with the double benefit of providing expertise for sound financial management of Aboriginal institutions and creating role models who transmit financial literacy to their communities by example and in ways that are culturally appropriate.

Second, Aboriginal financial institutions that integrate financial literacy training in their way of doing business have collectively had the single biggest impact on financial literacy over the last 30 years. As these institutions mature, innovative products and ways of bringing capital into Aboriginal communities are developed that address the legal, cultural and structural barriers, often in partnership with mainstream financial providers. Solutions have been developed, tried, and deployed, and their impact on Aboriginal economic and financial literacy has been demonstrated. Support to bring them to scale will be critical to their success.

The paper concludes that Aboriginal voices need to lead the effort toward effective financial literacy initiatives if they are to succeed. The full report is available here.
 

Canada - Enhancing Financial Literacy – June 2011 Budget Statement

“With the growing use of financial services by consumers, the importance of ensuring that Canadians have the tools and knowledge to be confident in their financial decisions cannot be overstated. The Government has received the recommendations of the Task Force on Financial Literacy, and it commends the important work that was done in support of this goal. As a first step, the Government is announcing that a Financial Literacy Leader will soon be appointed to promote national efforts, and is providing funding to advance financial literacy initiatives.

Budget 2011 proposes to provide $3 million per year, in addition to the $2 million per year already provided to the Financial Consumer Agency of Canada, to undertake financial literacy initiatives. Improving financial literacy is a long-term goal and a shared responsibility that requires all partners to work collaboratively to leverage the excellent efforts now underway across the country.”

View the budget statement here.

UK - Money Advice Service Health Check

The Money Advice Service has just launched a new money health check which aims to put people in charge of their money. In less than ten minutes, the free and unbiased health check - available at www.moneyadviceservice.org.uk/healthcheck  -  provides a personal action plan to help people stay on top of their money today, and plan to meet future goals.

The interactive health check asks a series of straightforward, multiple-choice questions and uses the answers to produce a personal action plan. For example, the plan will suggest ways to:

• stay on top of your day-to-day money;
• check you have enough emergency savings;
• make the most of your savings;
• make sure you can cope with a change in circumstances.

To help the nation take charge, and stay in control of their money, the Money Advice Service is also launching a national awareness campaign, ‘Helping you feel good about money.’ TV and online advertising will raise awareness of the Service so that everyone knows where to turn for free, unbiased money advice. The ‘Helping you feel good about money’ campaign launches with a TV commercial on 9 June. The campaign features animated illustrations by artist Andrew Park about how managing your money can make you feel good, today and in the future. It will be supported by outdoor and online advertising in summer and autumn 2011.

Poland - Economic educator website launch

Economic educator is a new website launched to enable economic and financial educators exchange ideas on how to improve financial literacy.  Developed by Marcin Polak of the Think! Institute Poland, the site draws on research, events and best practice that illustrate new learning and innovation in the field.

UK - Money Advice Service (Formerly Consumer Financial Education Body) 

On 4th April the Consumer Financial Education Body (CFEB) changed its name to the Money Advice Service.  They describe themselves as a "New independent organisation here to help everyone manage their money better". The new website is www.moneyadviceservice.org.uk

In February this year CFEB Chair Gerard Lemos gave his inaugural speech at a seminar hosted by the Royal Society of arts on Money: The Root of all happiness.

Speaking on the relationship between money and happiness, Gerard said: “If you look at how we manage our money, you’d think we wanted to be unhappy”. And posed some key questions: “Most people know what makes them happy. But this is often not reflected in behaviour. So how do we align people’s attitudes with their behaviour? In the age of instant gratification, how can we help people to withstand sensations and seek out emotions like happiness?”

He explained how he sees the role of his organisation changing in the near future:
“The task of financial education is not just to steer people away from bad financial decisions, but to enable everyone achieve their aspirations. I don’t see my organisation as just a problem-solving service. We are also a happiness service. Our job is not just to make people’s problems smaller, but to help people to make their lives bigger.

CFEB is about to become the Money Advice Service. We have chosen this name and this approach carefully. We want to provide advice that leads to action, not just information, though we will obviously not cross the regulatory boundary. We want to provide unbiased money advice to everybody that wants it – not just those who can afford it or those in the greatest need, but the huge majority in between as well.”

At the seminar the CFEB released new research on the long term impacts of financial capability. The research suggests that improving people’s current financial management skills – and in particular relating to their ability to make ends meet – will not only have immediate effects on, for example, their psychological wellbeing, but also have longer lasting effects on their mental health, living standards, savings behaviour and household income. Therefore the benefits of programmes that promote financial capability may reach beyond the more immediate into the medium to long-term. At the same time, our evidence suggests that the failure to help improve the financial management skills of individuals at the bottom of the financial capability distribution may have longer term impacts across a number of different domains.
 

The Canadian Taskforce on Financial Literacy

MoneySmart launched

http://www.moneysmart.gov.au/  is a key part of the Australian National Financial Literacy Strategy which was also launched on March 15th http://www.financialliteracy.gov.au/about-the-strategy

The Australian Strategy focuses on four interrelated areas of work:

• Education through schools and other pathways
• Providing trusted and independent information, tools and ongoing support
• Recognising the limits of education and information and developing additional innovative solutions to drive improved financial wellbeing and behavioural change
• Working in partnership with the many sectors involved with financial literacy, measuring our impact and promoting best practice

MoneySmart ‘provides more than information. The website includes 26 calculators and tools, some for use on mobile phones, to help people take simple steps to get quick answers to their questions about money. Money Smart covers not only the basics such as budgeting, saving, credit cards and loans, but also more complicated issues such as superannuation contributions, margin loans and income tax.’   Initial ‘hot topics’ on the site are first home buyers, choosing a super fund, buying a car and saving for a holiday.
 

Citi-FT Financial Education Summit - Mind over Money: Influencing Positive Financial Behaviour

UK - The Consumer Financial Education Body (CFEB) was launched in April 2010. 

Set up by the Financial Services Authority, the CFEB is responsible for providing information, resources and interactive tools to help people make informed decisions about money. One of their key tools is Moneymadeclear.

In the short time since their set up CFEB has:

• Held a conference in July - ‘From Financial Capability to CFEB: the Road Ahead’. The Chief Executive’s speech provides a good description of where they have come from, the progress that has been made and the future challenges.
• Released two significant reports:

• Begun work on the Annual Family Financial Health Check – an initiative announced in the 2010 budget. It will build on the Moneymadeclear tool. While still in the developmental stages, the health check is described as a ‘hook’ for people to take a first step in becoming adept at managing their money.
• In September the CFEB launched a Financial Behaviour Research Fund to “promote cutting edge research to inform our work and influence wider policy and practice’. The first call for proposals is focussed on ‘changing savings behaviour’.