FINANCIAL EDUCATION IN EUROPE: AN OVERVIEW Chiara Monticone OECD High-level conference on global and European trends in financial education 22-23 May 2014 - Istanbul, Turkey

Rationale: why financial education in

Europe

The current status

Challenges and future directions

Outline

• Survey on financial education in Europe

– It covers financial education and to some extent also financial consumer protection and financial inclusion

– Will be published in the course of 2014

– Supported by VISA Europe

all European countries are still welcome to contribute

Report on financial education in Europe

RATIONALE

• Most European countries underwent several pension reforms starting from the early 1990s aimed at improving financial sustainability of social security systems:

– Lower replacement rates for future generations

– Greater reliance on private pension provision to improve adequacy

Pension reforms

Household indebtedness

Italy

Germany

France

United States

United Kingdom

0

20

40

60

80

100

120

140

160

180

200

2005 2006 2007 2008 2009 2010 2011 2012

Household liabilities as a % of household nominal disposable income

Declining but still very high in the UK Lower but increasing in other countries like Italy and France

Source: OECD Economic Outlook No. 94

Financial exclusion

0

10

20

30

40

50

60

70

80

90

100

AR

M

MD

A

AL

B

UK

R

KS

V

RO

M

RU

S

MN

E

BG

R

BIH

TU

R

BL

R

SR

B

PO

L

ITA

HU

N

MK

D

LT

U

GR

C

SV

K

CZ

E

PR

T

CY

P

HR

V

LV

A

ES

P

IRL

LU

X

BE

L

ES

T

FR

A

AU

T

SV

N

GB

R

DE

U

NL

D

SW

E

FIN

DN

K

All population Bottom 40% of income Top 60% of income

Relatively lower levels and large variation across the population

Percentage of adults population (15+) with an account at a financial institution (including bank, credit union, cooperative, microfinance institution, post office, debit card)

Source: Global Findex

Close to 100%

A complement to financial consumer

protection and regulation

-60

-50

-40

-30

-20

-10

0

10

20

IRL

BE

L

ES

P

PR

T

NL

D

SV

N

GB

R

HU

N

DN

K

AU

T

GR

C

SW

E

CH

E

DE

U

FR

A

PO

L

ITA

FIN

ISR

ES

T

TU

R

CZ

E

LU

X

SV

K

NO

R

ISL

Source: OECD (2014), Society at a Glance

Percentage points variation in confidence in financial institutions between 2007 and 2012

… in a context of low financial literacy

-

10

20

30

40

50

60

70

80

90

100

Alb

an

ia 2

010

Arm

enia

20

10

Cze

ch R

epu

bli

c 2

010

Est

on

ia 2

010

Ger

ma

ny

20

10

Hu

ng

ary

20

10

Irel

an

d 2

010

No

rwa

y 2

010

Po

lan

d 2

010

Ser

bia

20

12

Un

ited

Kin

gd

om

20

10

On average in these European countries, less than 70% of the adult population can answer correctly eight financial knowledge questions 16% of UK adults shop around for financial products. This is even lower in other countries. About 20% of Estonians resorted to borrowing the last time their income fell short of their expenditure About half of Albanians disagree that money is there to be spent, but only 12% of Polish respondents Source: OECD/INFE financial literacy survey

Average percentage of adult population in each country answering correctly eight financial knowledge questions

POLICY RESPONSES

A NS is a nationally coordinated approach to financial education which consists of an adapted framework or programme that:

• Recognises the importance of financial education and defines its meaning and scope at the national level in relation to identified national needs and gaps;

• Involves the co-operation of different stakeholders as well as the identification of a national leader or coordinating body/council;

• Establishes a roadmap to achieve specific and predetermined objectives within a set period of time; and,

• Provides guidance to be applied by individual programmes in order to efficiently and appropriately contribute to the NS.

Around the world: 28 countries are designing/ developing their NS, 18 are implementing it, and 8 are revising their first NS or implementing a second revised one

Of these countries, one third is in Europe

National strategies

for financial education

National strategies for

financial education in Europe

Feb 2012

May 2014

Aims of national strategies

The overarching purpose of all these NSs is to strengthen financial literacy and promote positive financial behaviours, with a focus on:

Reducing over-

indebted-ness

e.g., Croatia, Estonia, Latvia,

Netherlands, Portugal, Serbia, Turkey, United

Kingdom

Improving long-term

saving

e.g., Croatia, Netherlands,

Portugal, Serbia, Spain, Turkey

Improving financial inclusion

e.g., Croatia, Estonia, Latvia,

Portugal, Romania, Turkey

Raising awareness

of consumers’

rights

e.g., Poland

Supporting pension reforms

e.g., Latvia, UK

Coordination mechanisms between finance/education public authorities, private sector and non-profits are in place in most countries

Private sector involvement: Certification systems / codes of conduct / principles (e.g., Czech Republic, Netherlands, Portugal, Spain) – voluntary but linked to official recognition of programmes within the NS

Stakeholders

Women

Turkey

Migrants Portugal

and Spain

Elderly people

Portugal, Romania, Spain, Turkey,

United Kingdom

Low-income groups

Latvia, Portugal, Romania, Russian Federation, Turkey

Young people

Czech Republic, Estonia, Latvia, Netherlands, Poland, Portugal, Romania, Russian Federation,

Serbia, Slovenia, Spain, Sweden, Turkey, United Kingdom

SMEs

Romania, Serbia, Turkey

Others

Pre-retirement, disabled, etc.

Main target groups

Provision of financial education in schools is uneven and limited (up to schools/teachers, little professional

development, no examinations), but growing

National standards /

Learning frameworks

(e.g. the Czech Republic, the

Netherlands, the Slovak Republic)

Integrated in school curriculum in another subject

(e.g., England and Spain)

Pilot projects in limited number of

schools before scaling up (e.g., Italy and Spain)

Financial education in schools

Coordination

stakeholders’ coordination for the development and implementation of

NSs is usually in place, but the involvement of private and not-for-profit sectors can require additional

specific monitoring/ compliance mechanisms

Evaluation

most countries monitor the implementation of their NS but only

few evaluate its impact (or parts of it)

Innovation

how to incorporate new technologies and ideas from other

fields to reach and engage particular groups

Core competencies

the development of learning outcomes / core competencies

frameworks is an important step not only for developing FE in schools

but also for adults

Challenges and way forward

THANK YOU!

Questions and feedback welcome

Chiara.Monticone@oecd.org

OECD/INFE www.financial–education.org