Financial Education for all: Financial education strategies and best practices within the European Union

• Context:
• The study:
• Key findings:
• Points to consider:

Context:

This EESC report aims to promote financial education policies with a view to improving consumer protection in the financial markets. This results from the fragile position of the retail consumer faced with a market inundated with complex financial instruments and a financial sector that has to some extent been behaving irresponsibly by not informing people about the risks that these products entail.

Financial education is the process through which consumers improve their understanding of financial products, financial risks and the opportunities presented by the market, so that they can make informed decisions on their finances. The report argues that making financial education widely accessible would benefit society as a whole, reducing the risk of financial exclusion and encouraging consumers to plan ahead and save, which would also help to prevent people getting into excessive debt.

The study:

The report provides summaries of the financial education run by 11 member states, including the UK and Germany, and other financial education initiatives run by non-state actors within the EU (including the OECD and the European Banking Federation). The report argues that the European Commission and the OECD have responded to growing complexity and lack of transparency in the financial system, and calls on the financial industry to apply new legislation properly and to self-regulate in order to foster appropriate and honest practices and making it easier to access transparent financial products. It also calls for financial education to become a compulsory subject on the school curriculum, and this education should be followed up in training and retraining programmes for workers. Further, it argues that current financial education programmes have limited reach and stresses that is important to evaluate their suitability.

Key findings:

• The descriptive nature of the report results in no key findings per se. Rather it details examples of best practice in financial education in 11 EU member states, and run by 8 non-state actors, including the OECD, the European Banking Federation and MasterCard. Good practices described include a programme in Germany to improve economic growth through financial education and training of entrepreneurs and employers, and a programme in Spain to improve financial literacy, which included financial education in schools and a code of conduct for participating organisations. There are no common features; the good practices described are deliberately diverse to demonstrate the variety of approaches available.
• It calls on the European Commission to the Commission to give serious consideration to developing legislative measures obliging the Member States to promote financial education in an effective manner.
• It argues that there is a broad consensus among bodies and institutions – possibly the most relevant in terms of financial education is the OECD’s International Network on Financial Education (INFE) – on the material and methods which are most appropriate for financial education.
• Further, the report argues that in light of the financial crisis, and developments in financial products and technology, it is imperative that member states provide a high level of financial education for all citizens to ensure that they have a strong understanding of financial products and management.
• Finally, the report argues that education systems must rise to the challenge of explaining the new financial economy in detail, adapting content and introducing it throughout the whole learning environment (students, teachers and families).

Points to consider:

Methodological limitations:

• This report is a review of practice interventions which does not independently evaluate outcomes.

Relevance:

• The report is relevant to a study of financial education in the EU.

Generalisability/ transferability:

• The report is specific to the programmes discussed and to the views of the EESC. It is not generalisable or transferable.