OECD CONFERENCE
ON CORPORATE
RESPONSIBILITY
Paris, 15th March 2009
Bruno Levesque, Principal Administrator, Financial
Education
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OECD programme on financial
education
• Recognising the need for policymakers and other
relevant stakeholders to meet the objective of
improving financial education, the OECD
launched in 2oo3 its “international programme
on financial education”
• Under the aegis of the OECD Committee on
Financial Markets and the OECD Insurance and
Private Pensions Committee
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OECD Financial Education Programme
--Tree pillars--
1. Analytical
–
Surveys, reports and publications on a broad range of financial
education issues and topics
2. Standard setting
-
OECD Principles and Good Practices for Financial Education and
Awareness (2005)
Good Practices for Enhanced Risk Awareness and Education on
Insurance Issues (2008)
Good Practices for Financial Education Relating to Private Pensions
(2008)
Good Practices on Financial Education and Awareness Relating to
Credit (May 2009)
3. International cooperation
–
–
Conferences and events
International Network and Gateway
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www.financial-education.org
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What is financial
education?
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Financial Education
Financial education is a complementary process,
helping consumers to become financially literate
•
•
•
•
Understand their rights and responsibilities as financial consumers
Know where to go for information and recourse
Understand their profile and needs
Shop around for the best option and product, ask the right
questions and make the best choice for their needs
• In other words, make the best use of the information
disclosed/available to them
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Why is financial
education and
awareness so
important?
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OECD Trends
We observe that individuals face increasing
financial risks and costs due to:
• Increased complexity
• Multiplication of inexperienced consumers
• Households are taking on more financial risk and
responsibility. This is true for both credit decisions and
retirement savings.
– The shift to defined contribution pension schemes transfers both
investment and longevity risks to individuals. Will they make
the right decisions?
– The market for adjustable, variable, interest only mortgage loans
(sometimes also in foreign currency) has exploded in several
countries and transfer interest rates risk on households
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Consumers are clearly not prepared to
face these challenges and risks
• Worldwide surveys show the level of financial literacy is
low in all countries, including in developed countries.
• Worse: consumers often overestimate their financial
understanding and thus do not seek to improve it
Consumer pressures exacerbated in the
crisis context
• Financial crisis evolved into a recession
– Over 50 million jobs to be lost (according to the UN)
– Revenue loss in many households
• Asset values going down
– Decreased value of property
– Plunging pension fund returns (> $5 trillion in losses)
The crisis
• Causes are multifaceted:
--solvency
-- accounting rules
--deleveraging
-- regulatory arbitrage
-- liquidity
--securitisation
--rating agencies
-- etc…
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Responses
• Resulting initiatives are multidimensional:
-- Incentives
-- Macro-prudential reforms
-- Corporate governance
-- Taxation
-- Business environment and competition policy
-- Trade and investment
-- Macroeconomic, fiscal and labour market policies
• Particularity of OECD’s strategic response :
– Recognizes the lack of financial education and awareness of
both individuals and institutions
– Proposes consumer protection and education policy actions
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OECD strategic response to
the crisis
Two key consumer-related deliverables:
1. Survey on financial education and the crisis conducted
within the INFE framework
2. OECD Recommendation on Good Practices on Financial
Education and Awareness Relating to Credit
1. Results of the survey on
financial education and the crisis
• Lack of financial literacy is one of the contributors to the crisis
and in particular of its aggravation
• The crisis and its consequences have highlighted the need for
enhanced level of accountability of financial institutions visà-vis their clients and consumers
• They have also raised awareness on the need for increased
financial literacy and capability of households and policymakers
– The crisis as a « teachable moment »
– The crisis as a trigger for policy actions in the financial education area
Financial literacy and capability is now considered as :
• one of the pillars of financial stability
• an essential life-skill for households
 A series of financial awareness and education policy
measures have been introduced to address the effects of the crisis
2. OECD Good Practices on
Financial Education and
Awareness Relating to Credit
• Adopted in May 2009 as a Council
Recommendation
• Covers main stakeholders’ roles and
responsibilities in enhancing public awareness
and capability on credit issues, including roles of:
– OECD
– Governments and other Authorities
– Other social and business partners NGOs
– Credit market players
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Role of credit market players
1. Role should be well defined and part of their
good governance
2. Liable for ensuring staff’s training, qualification
and competence
3. Use of “due diligence” standards to assess
consumers’ profiles should be mandatory for all
credit providers as part of the underwriting
process
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Role of credit market players (cont’d)
4. Information disclosed should be distinguished
from advertising and promotion.
5. Responsible for ensuring consumers’
understanding of products they purchase
6. Should ensure suitable and easily accessible
consumer information about their right to
recourse.
7. Intermediaries or third parties should have same
liabilities and obligations as any credit market
participant.
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Conclusion
• This crisis represents a unique teachable moment for all stakeholders on
the importance of financial education and awareness.
• Financial education sits alongside effective regulation as a consumer
protection measure and is not a replacement for a safe and fair market or
for effective regulation.
• The OECD will continue to play a leadership role in informing policy
development in the area of financial education and awareness. A
significant area of research will focus on the roles and responsibilities of
financial service providers, especially intermediaries.
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THANK YOU

Bruno.levesque@oecd.org
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