Action Plans for Consumer Protection and Financial Literacy in Azerbaijan

Transcription

1 Action Plans for Consumer Protection and Financial Literacy in Azerbaijan Financial Literacy and Financial Capability Baku, 17 December 2009 Shaun Mundy Financial Capability Consultant and Former Head of Financial Capability, Financial Services Authority, UK

2 I. Background What is meant by financial capability? What does financial capability include? International context Why is it important in Azerbaijan? Financial capability and sound regulation are complementary Main beneficiaries of improved financial capability What issues should financial capability programmes cover?

3 What is meant by financial capability? The ability and confidence to manage your personal finances well now and in the future Can be provided through financial education and financial literacy but broader than these Includes knowledge, understanding, skills and attitudes but it is ultimately about how people behave Financial capability can be improved through financial education, information and guidance

4 What does financial capability include? Financial capability comprises: making ends meet; keeping track of your finances; planning ahead; choosing financial products; staying informed about financial matters.

5 International context A number of international organisations including the World Bank, CGAP and OECD are actively promoting the development and implementation of financial capability initiatives A range of countries including both developed and developing countries have developed, or are developing, national strategies or action plans for financial capability

6 Why is it important to improve financial capability in Azerbaijan? People who are financially capable are: more likely to take up and use financial products, to save, and to plan ahead less likely to buy financial products which they do not understand or do not meet their needs, or to be caught out by financial frauds Being able to manage your personal finances well is also an important step towards running a business

7 Improving financial capability and regulation are complementary Improving financial capability and sound regulation are complementary not alternatives Improving people's financial capability is not sufficient it needs to be complemented by effective: prudential regulation (to minimise the risk of financial services firms collapsing) and consumer protection regulation

8 Main beneficiaries of improved financial capability include: Consumers and civil society organisations helps people to make their money go further and make provision for their futures; and to avoid unnecessary risks, being overcharged or becoming over-indebted. Less likely to be financially excluded The Government, CBA and other financial services supervisors less need to deal with results of poor money management skills among consumers Financial services industry consumers more likely to buy appropriate financial products and services (increases business volumes; reduces marketing costs; fewer complaints) Employers

9 What issues should financial capability programmes cover? Start with the basics and build on these Priority issues for financial capability include: savings, using banking and similar services, planning ahead, responsible use of credit, investments, protecting yourself against risks, choosing products and staying informed, protecting yourself against financial frauds, knowing your rights and responsibilities, remittances Priorities should take account of any current concerns as evidenced, for example, through consumer complaints or queries

10 II. Specific actions to be undertaken Leadership and coordination Developing a national financial capability programme Financial capability steering group, Communications plan National financial capability survey Financial education initiatives In schools, for young people, in workplaces Teachable moments; and training of trainers Consumer communications strategy Consumer testing; and monitoring and evaluation

11 Leadership and co-ordination Effective leadership will be required to drive forward and co-ordinate work on financial capability CBA is best placed to lead work to improve the population's financial capability In doing so, the CBA should work in partnership with a range of organisations from the Government (Ministry of Finance, State Committee for Securities, Ministry of Education, Ministry of Agriculture, Ministry of Economic Development, Ministry of Communications and Information Technology, Ministry of Taxes), the Parliamentary Commission on Economic Policy, Azerpost, the private sector, NGOs, the media, etc

12 Prioritisation and working in partnership Leadership and co-ordination should include ensuring that: a national financial capability programme is developed, with priorities and timeframes a broad range of organisations work in partnership activities of partners are co-ordinated partners are consulted and communicated with programmes developed by other countries are studied to avoid reinventing wheels

13 Developing a national financial capability programme Development of a national programme will ensure a full and co-ordinated range of initiatives and avoid unintended gaps and unnecessary overlaps. Guiding principles should include: focus on target groups, segmented according to needs and how to reach them clear outcome-based goals based on partnership working using a variety of approaches and channels lively and engaging and using plain language monitoring and evaluation incorporated from outset

14 Financial capability steering group CBA should establish and chair a steering group, comprising some very senior representatives from a range of key stakeholders Steering group should: develop a national programme for financial capability (based on this action plan) which should set out initiatives to be undertaken and timeframes for implementation monitor the implementation of the programme and consider the need for any modifications

15 Communications plan Essential to communicate with partners and potential partners and other stakeholders so that they understand the case for improving the population's financial capability, what is already being done or is planned to be done, and how they can contribute Methods can include conferences and workshops; letters and s; newsletters; newspaper and journal articles Professional associations, together with other representative bodies, can play an important role in communicating with their members

16 National financial capability survey A national financial capability survey can be very helpful in: identifying priorities for action providing a baseline against which future changes can be measured Follow-up surveys should be undertaken every four to five years to measure changes and identify ways in which the national programme for financial capability may need to be modified

17 Financial education in schools People tend to develop attitudes to money early in life. Many young people are already having to take some financial decisions (and can help their parents) Curricula are crowded but financial education can be incorporated into a range of other subjects (e.g. life skills, mathematics and arithmetic, languages and history) Some financial education already in curriculum compare existing provision with other curricula to identify any gaps Schoolchildren find financial education programmes which are relevant (e.g. saving for a bicycle or computer rather than pensions) and interactive more engaging Many examples of curricula and resources for each age group which can be drawn on Most teachers don't feel financially capable they need training and resources

18 Financial education for young people Options include: education, training, information or guidance to students at universities and colleges personal finance website for young people and/or the incorporation of financial capability materials into broaderbased websites financial capability messages in television and radio programmes, newspapers, magazines, leaflets, posters and drama which are aimed at young adults games and activities tailored to young adults

19 Financial education presentations in workplaces Financial capability presentations, or DVDs, can be delivered in workplaces Provided there is sufficient support for this among employers and trades unions, a standard presentation should be developed and people identified to deliver the presentation Presenters could include staff in the employer's training department; and volunteers from financial services firms

20 Teachable moments; and training of trainers Take advantage of teachable moments, when people more likely to be receptive to personal finance messages: e.g. people who are planning to get married, people who are separating from their partner, parents before or after the birth of a child, people starting a new job, and households receiving overseas remittances People who provide personal financial education to others need to be trained, even if they are themselves financially capable, in order to deliver personal finance education in a clear and compelling manner

21 Potential partners include: Financial services firms so long as it is not in reality marketing Ministry of Agriculture 201 rural training centres Azerpost 70 branches and 1510 departments Azerbaijan Micro-finance Association (AMFA) Azerbaijan Credit Union Association Azerbaijan Banks Association Azerbaijan Community Development Research, Training and Resource Center American Chamber of Commerce in Azerbaijan

22 Consumer communications strategy could include: Television and radio, making personal finance as accessible as possible to ordinary people for example, through incorporating it into soap operas or radio phone-ins Newspaper and magazine articles preferably within nonspecialist sections CBA and other financial services regulators should provide the media with information about current concerns and about different types of financial services and products Personal finance consumer website should be developed and widely publicised and promoted Regulators led by the CBA should develop comparative tables for the most popular classes of financial products

23 Consumer testing; and monitoring and evaluation To ensure that financial capability programmes deliver the intended results, test them with members of the target group e.g. through consultation with consumer groups, the use of focus groups or pilot tests Monitor and evaluate programmes to measure impact helps in deciding whether programme should be continued, changed or dropped. Evaluation must be designed in from outset or information needed to undertake an effective evaluation may not have been collected

24 III. Costs Costs will depend on a range of factors, principally the amount of work which proves necessary to develop and undertake initiatives and the extent to which organisations are prepared to absorb costs as part of their normal activities. Costs associated with particular initiatives can be minimised by: using or adapting resources already produced either in Azerbaijan or elsewhere using the same resources in a variety of relevant contexts avoiding unnecessary duplication eg developing a single financial capability website

25 IV. Possible funding sources the CBA and other financial services regulators the Government development agencies NGOs financial services firms and trade associations trusts or foundations associated with financial services firms In-kind resources can be effectively free of charge (e.g. teacher time)

26 Thank you! Shaun Mundy Financial Capability Consultant and Former Head of Financial Capability, Financial Services Authority, UK