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COMBINING FINANCIAL EDUCATION AND
CONSUMER PROTECTION IN
ADDRESSING THE NEEDS OF
VULNERABLE GROUPS
THE OECD/INFE GUIDANCE
OECD/Thailand Seminar on Financial Literacy and Inclusion in Asia 16/17 December, Bangkok
Flore-Anne Messy Deputy Head, Financial Affairs Division, OECD Executive Secretary International Network on Financial Education
1 • Global context and rationale
2
• Challenges and identified needs of vulnerable groups
3 • Existing OECD/INFE instruments
4 • The guidance and implementation tips
Outline
Financial empowerment trilogy :
Global recognition
Financial Education
Financial Consumer Protection
Financial Inclusion
G20 (2010) Principles
for Innovative
Financial Inclusion
G20 (2011) High-Level
Principles on Financial
Consumer Protection
developed by the OECD
OECD/INFE(2012)
High-Level Principles on
National Strategies for
Financial Education
Th
e s
itua
tio
n Worlwide more than 2bn
individuals are financially excluded
Fewer than 60% with a bank account in Asia (only 30% in South Asia)
Low levels of financial literacy, confidence motivation
These levels are related to levels of income
FCP requirements remain uneven
Th
e t
rends Increased access to
financial services
More needs for financial services & investment
• Demographic evolution • Social trends • Uncertain economic situation • Environmental developments
More transfer of risks •To individuals/families, micro & small entrepreneurs •Due to shrinking solidarity and welfare/corporate benefits
Global and Asian challenges to financial empowerment
call for an integrated and tailored approach
Financial education (OECD/INFE surveys and Principles)
Youth
Women
Migrants
Low income/education &
remote areas
Elderly
Microentrepreneurs
Financial consumer protection (principles)
low income
less experienced
Globally identified vulnerable groups of the population
Recognised by G20
Leaders in 2013
The overall Framework (2012) OECD/INFE High-level Principles
on National Strategies for Financial Education
General instruments •2005
Principles and Good practices on Financial Education and Awareness
•2014 OECD/INFE Guidelines for private and civil stakeholders in financial education
Sectoral Good Practices • 2008
2 Good Practices for Financial Education relating to Private Pensions & for Enhanced Risk Awareness and Education on Insurance issues
•2009
Good Practices on Financial Education and Awareness relating to Credit
Methodological tools
•2011
High-level Principles for the Evaluation of Financial Education Programme
• 2013 Toolkit on measuring Financial Literacy and inclusion
Target Audiences
•2012
OECD/INFE Guidelines for Financial Education in Schools
•2013
OECD/INFE Policy guidance on addressing women’s and girls’ needs for financial education
10 OECD/INFE policy and practical instruments
to be consolidated in 2015
2012 Evidence &
OECD Working paper on financial
education to promote financial inclusion
2013/14 Development of the guidance by
the INFE subgroup on
FE for FI
Oct.2014 Submission to the G20/OECD Task Force on
FCP
2015 Submission to
the GPFI
Implementation in countries &
feedbacks
The Policy Guidance on Financial Empowerment
for Vulnerable Groups : Process
Additional effort
needed for vulnerable
groups
They are less
resilient
They risk a downward spiral of poverty
They may be more
easily the victims of fraud & abuses
They often lack
confidence, motivation,
literacy, access and resources
Rationale for the Guidance
Financial inclusion
Financial education Financial consumer protection
G20/OECD Definitions
Financial empowerment
the provision of financial education, opportunities and guidance to make financial decisions and use suitable
financial services within a protective and enabling framework to improve financial wellbeing
Vulnerable groups
High levels of social and/or financial exclusion
Limited resilience to negative events.
Individuals, households and entrepreneurs
Definition & Scope
I) Enabling framework for financial empowerment
II) Identifying the needs, barriers and preferences of vulnerable groups
III) Offering good practices and effective/innovative approaches
Objectives and structure
Integrate financial education, FCP and financial inclusion policies, and specifically identify additional efforts needed for vulnerable groups
Develop wellbeing indicators and targets and identify the role of financial empowerment
Involve stakeholders in design, development and implementation (taking into account OECD/INFE guidelines for non-governmental stakeholders)
Ensure the framework is sustainable, and evaluate policies and programmes to ensure efficiency
I) An enabling framework
Integrating FE & FCP
• Indonesia : FCP mandate of the FSA which also involves FE
• India : overall FI objectives – FE and FCP as part of it
• US (FPCB)
• FCP and FE are combined
• Research is harnessed in both workstream
• Ongoing surveys to determine financial wellbeing
Role of stakeholders
• Indonesia – Financial institutions to provide FE and report
• India : state banks to have FE centers in big villages
• Partnerships in Malaysia on projects
• Importance to apply the OECD/INFE guidelines when involving private and non-for-profit stakeholders
• Role of the industry in fair treatment of consumers (e.g. Brazil – credit for CCT recipients)
Examples of enabling environment
Use evidence to identify target groups in a particular country
By level& stage of financial inclusion
By other demo, socio, eco factors : low income, young, informal workers, the elderly, women, migrants, ethnic minorities micro and small entrepreneurs, rural inhabitants.
By barriers to financial access or social inclusion (no internet connection, remote location)
Use data and other sources to identify their needs and preferences
National and regional/global quantitative data
qualitative surveys
research
Identify effective delivery mechanisms
Map existing provision
Monitor provision
Evaluate initiatives
Share findings through global fora (e.g. INFE, GPFI)
II) Identified vulnerable groups, their
needs, and the barriers they face
Quantitative :
• South Africa – survey using INFE identify groups at risks
• Japan : development of core competencies
• Internationnally : PISA FL – highlight the particular needs of young people from immigrant origins in a range of countries
Qualitative :
• Mexico – mystery shopping- inadequate information and advice for vulnerable groups
• UK – Findings of the FCA on abuses and fraud used to developed training and redesign FCP rules – identify groups at risk in the case of investment (elderly male)
Sharing & disseminating :
the OECD/INFE global platform of evaluated programmes
Examples- developing evidence to support
policies and practices
• Financial products are suitable and accessible to vulnerable groups including MSMEs (possibly developing digital technologies to ensure accessibility- booming mobile penetration)
• KYC requirements are also adapted or mechanisms are in place to ensure vulnerable groups can meet them
• Data and confidentiality of information is protected
Harness FCP to ensure that it is
proportionate to the risks and the
population involved
• Tailored and understandable : especially fees, risks and benefits of products should be made easy to understand - using local languages, visual representations
• Easily comparable
Provide information and advice that is
• in an affordable and accessible way
• regardless of barriers such as language or geography.
Make it possible to complain
III) Good practices and effective approaches:
Harnessing financial consumer protection
• using multi-media campaigns also adapted to vulnerable groups
Develop trust and awareness on available products and on rights & responsibility of consumers
• Start early and for all
• Repeat throughout life : Key changes in family life and location
• Alongside supply- approaches and market innovations
• Be adapted to the stage of FI of vulnerable
• Be adapted to the level of FL and their preferences
Improve financial knowledge, motivation and skills
• Leverage on existing channels
• Local community, educational pathways, & radio, tv, mobile phones
• Research to explore innovative tools ( tablets) and new approaches : edutainment
• Incentives to participation (prize-draw & free-meal)
• Integration of financial literacy content in existing training
• Deliver financial education to individuals and families/communities
• Rely on trusted partners and disseminators (+ role models)
Ensure effective outreach to promote behavioral changes
III) Good practices and effective approaches: Developing trust, financial awareness, knowledge & skills
Access, demand and content matters!
