fsd's financial education programme: evaluation and ... - FSD Kenya

24 • FSD’S FINANCIAL EDUCATION PROGRAMME: EVALUATION AND RECOMENDATIONS
for which the data may be collected, processed, held, used and disclosed
(especially to third parties). The mechanisms should also acknowledge the
rights of consumers to be informed about data-sharing, to access data and
obtain the prompt correction and/ or deletion of inaccurate or unlawfully
collected or processed data.”
9. Complaints handling and redress. “Jurisdictions should ensure that
consumers have access to adequate complaints handling and redress
mechanisms that are accessible, affordable, independent, fair, accountable,
timely and efficient. Such mechanisms should not impose unreasonable
cost, delays or burdens on consumers. ….. Financial service providers and
authorised agents should have in place mechanisms for complaint handling
and redress. Recourse to an independent redress process should be available
to address complaints that are not efficiently resolved via the financial service
providers and authorised agents’ internal dispute resolution mechanisms.
At a minimum, aggregate information with respect to complaints and their
resolution should be made public.”
10. Competition. “Nationally and internationally competitive markets
should be promoted in order to provide consumers with greater choice
amongst financial services and create competitive pressure on providers
to offer competitive products, enhance innovation and maintain high
service quality. Consumers should be able to search, compare and,
where appropriate, switch between products and providers easily and at
reasonable and disclosed costs.”
Financial education and capability 5
Financial literacy relates to an individual’s knowledge of financial concepts
and products. However, knowledge is not sufficient and an individual also
needs the required skills to apply this knowledge. Furthermore, an individual’s
value system and attitudes impact on how and whether knowledge and skills
are translated into action (behaviour). So a complicated set of factors are at
play that impact on both an individual’s learning (internalising a message)
and his/her behaviour. These include previous learning, personality, cultural
influences, value system and current financial context. Financial education
focused on behavioural modification is therefore required to create a positive
pre-disposition among consumers for the message to be ‘heard’ and acted
on.
The term financial capability is therefore preferred to financial literacy
as it better reflects the complementary components of knowledge, skills,
confidence, a positive predisposition and ultimately, a change of behaviour.
Financial capability can be defined as: “The ability of an individual to act with
confidence in making the optimal choices in the management of his/her
money matters.”
5 Adapted from: Financial Literacy Framework for Tanzania. 2010. Piprek, Gerda, L. - Marketworx Africa.
Financial education is the broad term reflecting all activities aimed at
transferring knowledge and skills and influencing behaviour. Financial
education can take various forms and a combination of these and different
channels should be included in a consumer strategy, depending on the needs
of the target audience and the strategic objectives:
• Awareness of product and institutional types, rights and responsibilities,
recourse options, changes in the market place and where to turn for
advice or assistance when in financial distress.
• Broad-based/generic financial education focused on developing
general financial management and planning skills such as budgeting,
cash flow management and retirement planning. This is required on an
on-going basis throughout an individual’s lifetime.
• Discrete or event-specific financial education which is product
category specific, such as informing/ educating consumers on how to
purchase a vehicle using hire-purchase or a house through a mortgage
loan. It is generally required on an as needed basis through a person’s life
and will change with a person’s life stage.
• Behavioural change: focused on influencing values, beliefs, attitudes
and perceptions.
• Financial and money advice: this stands somewhat apart from what
is generally termed as financial education: money advice is provided for
free, but financial advice is paid for or tied to a sale. If tied to the sale of
a product, this is generally not viewed as financial education at all, but
rather sales or marketing.
From the above, it follows that financial education is not a once-off, but requires
lifelong intervention. The Life Stage Approach 6 to financial education (Figure
1) was introduced in 2004 7 and provides a framework for the development of
a financial education strategy on a national level. It takes into consideration
the life cycle of consumers and underscores the importance of early learning.
Relevance of financial capability and relationship to consumer
protection
The attention of governments and practitioners in the development and
support of financial sectors has historically been focused primarily on the
enabling environment (legal, regulatory and policy) and on the supply side.
Only in the past decade has the importance of financial capability among
consumers been recognised.
6 Adapted from: Financial Literacy Scoping Study and Strategy Study FinMark Trust 2004, page 42.
Piprek, G.L., Coetzee, G., Dlamini, P. – ECIAfrica.
7 Ibid.