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National Financial Literacy Strategy 2014–17 Contents Foreword 1 2014–17 Strategy: An overview 2About the Strategy 2 Core principles 2 Strategic priorities and core actions 3 Action plan 4 The increasing importance of financial literacy 6What is financial literacy? 6 Influencing decision-making behaviour through financial literacy 8 Flow-on effects to the broader economy 9 Financial literacy in the Australian context 11Behavioural indicators 11 Changes in financial literacy 12 Literacy, numeracy and problem-solving skills 12 The demographics of financial literacy 14 Developing the 2014–17 Strategy 15The consultation process 15 Action plan 16 Co-ordination and reporting 16 Changes in financial behaviour 16 A long-term journey 17 Strategic priorities 2014–17 18Priority 1: Educate the next generation, particularly through the formal education system 18 Priority 2: Increase the use of free, impartial information, tools and resources 22 Priority 3: Deliver quality targeted guidance and support 26 Priority 4: Strengthen co-ordination and effective partnerships 30 Priority 5: Improve research, measurement and evaluation 31 Other useful information 332014–17 Strategy action plan 33 National Strategy website 33 Note: For ASIC purposes, this is ASIC Report 403. It is available on the ASIC website at www.asic.gov.au/reportsAustralian Securities and Investments Commission 2014 1 Being able to confidently navigate the financial landscape and make good decisions about money are core life skills every Australian needs. Improved financial literacy can benefit anyone, regardless of age or income. Being able to make the most of your money, manage financial risks and avoid financial pitfalls can have a positive impact on the financial wellbeing of individuals, families and communities. The Australian Securities and Investments Commission (ASIC) has national responsibility for co -ordinating financial literacy and works closely with the Australian Government Financial Literacy Board.In 2011, ASIC published the first National Financial Literacy Strategy (2011 Strategy) to promote a collaborative approach to improving the financial wellbeing of Australians. The National Financial Literacy Strategy 2014–17 (2014–17 Strategy) builds on the foundation of the 2011 Strategy and provides a practical framework for action for stakeholders across the government, business, community and education sectors over the next three years. The 2014–17 Strategy has been developed in consultation with stakeholders and is informed by the substantial research and knowledge base built up over the past decade as well as international best practice guidelines. It articulates five strategic priorities and identifies key actions to support these. While considerable progress has already been made, bringing about a significant change in Australians’ financial literacy levels is a long-term journey – one that will take at least a generation. I trust the 2014–17 Strategy will help support greater financial literacy in the Australian community. The Hon Steven Ciobo MP Parliamentary Secretary to the Treasurer Foreword 2014–17 Strategy: An overview The 2014–17 Strategy aims to improve the financial wellbeing of Australians by advancing their financial literacy. About the Strategy The Australian Securities and Investments Commission (ASIC) is the Australian Government agency with lead responsibility for financial literacy. ASIC is committed to raising awareness of financial literacy and its benefits and creating opportunities for Australians of all ages and backgrounds to increase their understanding of financial issues and make the most of their money. This financial literacy work is a key component of ASIC’s regulatory role to promote confident and informed participation by consumers and investors in financial services and markets. In 2011, ASIC published the first National Financial Literacy Strategy (2011 Strategy)1 to promote a collaborative approach to improving the financial wellbeing of Australians.2 Since that time, there have been many developments, both in financial literacy and in understanding community needs. In 2013, ASIC conducted a consultation process on the 2011 Strategy to take stock of progress and develop an updated framework for action for 2014–17. Findings are summarised in Shaping a National Financial Literacy Strategy for 2014–17: Consultation feedback (2013 Consultation feedback).3 A National Financial Literacy Stocktake Survey (2013 Stocktake Survey) was also undertaken to gain a snapshot of financial literacy initiatives in Australia.4 The development of the National Financial Literacy Strategy 2014–17 (2014–17 Strategy) was informed by input from key stakeholders, advice from the Australian Government Financial Literacy Board, and relevant research and international good practice guidelines.5 Building on the elements of the 2011 Strategy, the 2014–17 Strategy is designed as a flexible framework for action, encouraging active participation and providing scope for both new and existing initiatives. The Strategy recognises that all levels of government, financial institutions, large and small businesses, community organisations and the education sector have a valuable role to play in building the financial literacy of Australians. 1 ASIC, National Financial Literacy Strategy (REP 229), 2011, www.financialliteracy.gov.au/media/218312/national-financial-literacy-strategy.pdf. 2 Key elements of the 2011 Strategy included using formal education pathways, providing trusted and independent information, recognising the limits of education and information and developing innovative solutions to change behaviour, and working in partnership and promoting best practice. 3 ASIC, Shaping a National Financial Literacy Strategy for 2014-17: Consultation feedback (REP 374), 2013, www.financialliteracy.gov.au/media/458259/report-374_shaping-a-nfls_consultation-feedback_2014-17.pdf. 4 ASIC, National Financial Literacy Stocktake Survey (REP 375), 2011, www.financialliteracy.gov.au/media/458028/report-375_nfls-stocktake-survey-2013.pdf. 5 For links to good practice documents and guidelines, including for financial education in schools, see www.oecd.org/finance/financial-education/nationalstrategiesforfinancialeducation.htm. Core principles The 2014–17 Strategy is underpinned by the following core principles:
Strategic priorities and core actions Improving financial literacy is a long-term behavioural change initiative. A multi-faceted approach and sustained action by multiple stakeholders over time is integral to bringing about gradual improvement, as is continuing to learn from evaluations of programs and the growing body of research on the myriad influences that affect financial decision-making. The 2013 Stocktake Survey identified a wide range of financial literacy initiatives being conducted around Australia, with a significant degree of cross -sectoral collaboration. The 2014–17 Strategy aims to leverage this collective activity to extend reach and effectiveness through five strategic priorities: see Figure 1.The first three strategic priorities focus on building the capacity of individuals, families and communities. The other two provide direction to organisations involved in financial literacy research, policy development and program delivery. Core actions and key indicators of progress under each strategic priority are summarised in the action plan on pages 4–5, which is intended to guide the efforts of all stakeholders with an interest in this area. See page 18–32 for more detail about each strategic priority. Figure 1: Strategic priorities 2014–17
Action plan VISION: Improve the financial wellbeing of Australians by advancing their financial literacy STRATEGIC PRIORITIES Individuals, families and communities 1. Educate the next generation, particularly through the formal education system 2. Increase the use of free, impartial information, tools and resources 3. Provide quality targeted guidance and support CORE ACTIONS 1.1 Continue to promote a curriculum-based approach to teaching financial literacy in schools 1.2 Increase the number of teachers trained through ASIC’s MoneySmart Teaching professional learning program 1.3 Develop resources for teachers and students with a key focus on the Australian Curriculum for Economics and Business 1.4 Increase the engagement and confidence of teachers to teach consumer and financial literacy through the Australian Curriculum 1.5 Increase the number of vocational education and training (VET) students participating in financial literacy education 2.1 Continue to enhance ASIC’s MoneySmart as a core resource for the Australian population 2.2 Increase the number of people accessing MoneySmart and other free, impartial sources of information, tools and resources, including for example: ? Indigenous Australians ? pre-retirees ? seniors, and ? women 2.3 Promote workplace-based financial literacy programs 3.1 Foster good practice in programs and services providing targeted guidance and support, particularly to disadvantaged and/or vulnerable groups 3.2 Improve targeted guidance and support to better meet the needs of Indigenous people and communities 3.3 Build the capacity of intermediaries who deliver financial literacy programs to disadvantaged and/or vulnerable individuals, families and communities KEY INDICATORS ? Number of schools engaging in financial literacy education ? Number of teachers participating in ASIC’s MoneySmart Teaching professional learning program ? Number of VET students participating in financial literacy education ? Number of people accessing ASIC’s MoneySmart website and print materials ? Number of people accessing other free, impartial sources of information, tools and resources ? Outcomes of research studies and evaluations show changes in financial wellbeing ? Number of people assisted by national targeted guidance and support programs ? Feedback from intermediaries about guidance and support provided ? Outcomes of research studies and evaluations show changes in financial wellbeing Australian Securities and Investments Commission 2014 5 VISION: Improve the financial wellbeing of Australians by advancing their financial literacy STRATEGIC PRIORITIES Policy and program development 4. Strengthen co-ordination and effective partnerships 5. Improve research, measurement and evaluation CORE ACTIONS 4.1 Facilitate implementation of the 2014–17 Strategy action plan 4.2 Improve co-ordination between relevant government-funded programs and service providers 4.3 Increase opportunities to build links and share good practice within and across sectors, nationally and internationally 5.1 Participate in relevant international research 5.2 Conduct national research to contribute to the understanding of Australians’ financial literacy levels, and the influencing factors 5.3 Increase access to tools and resources to support good practice in evaluation 5.4 Foster good practice by increasing access to experts in the field and sharing what works 5.5 Foster research on enhancing the effectiveness and impact of financial literacy programs KEY INDICATORS ? Enhanced co-operation and partnership between relevant government departments ? Feedback from members of ASIC’s national Financial Literacy Community of Practice network ? Feedback from attendees at national forums and workshops ? ANZ Survey of Adult Financial Literacy in Australia ? Number of financial literacy programs being evaluated ? Feedback from financial literacy stakeholders on opportunities to share information and recognise good practice 6 National Financial Literacy Strategy 2014–17 The increasing importance of financial literacy Over the past decade, particularly since the global financial crisis, financial literacy has gained prominence on the policy agendas of most world economies, with many identifying it as an important complement to financial market regulation, consumer protection and financial inclusion policies. 6 According to the Organisation for Economic Co-operation and Development (OECD), factors contributing to this prominence include:
Around 50 economies worldwide are currently considering, designing or have implemented national strategies on financial education. 8 Australia is regarded as a leading player in the financial literacy field and plays an active role in contributing to relevant international financial literacy forums.What is financial literacy? Financial literacy is an essential everyday life skill. It means being able to understand and negotiate the financial landscape, manage money and financial risks effectively and responsibly, and pursue and attain financial and lifestyle goals. Because financial literacy is a relatively new area, alternative definitions exist and continue to be refined. Feedback from the 2013 Consultation process revealed that most stakeholders agreed that the definition used in the 2011 Strategy needed to be updated. In particular, stakeholders expressed the view that the revised definition should acknowledge the role personal circumstances and context play in shaping attitudes and behaviours, and should reflect the fact that building financial literacy and wellbeing is a dynamic and ongoing process.Therefore, for the purposes of the 2014–17 Strategy, financial literacy is defined as follows: Financial literacy is a combination of financial knowledge, skills, attitudes and behaviours necessary to make sound financial decisions, based on personal circumstances, to improve financial wellbeing. This definition draws on the definition used by the OECD International Network on Financial Education (INFE) in their High level principles on national strategies for financial education,9 as well as taking into account the views of Australian stakeholders.Financial literacy is a key contributor to improving financial wellbeing. However, it must be supported by other complementary factors which lie outside the scope of the 2014–17 Strategy. Depending on circumstances, these factors may include financial inclusion, access to suitable financial products, and appropriate consumer protection and financial services regulation to ensure fair and efficient financial markets: see Figure 2. 10
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