Industry calls for increased consumer financial literacy

TheAustralian Securities and Investments Commission (ASIC)and theAssociation of Superannuation Funds of Australia (ASFA)have called for a greater industry effort to boost the level of financial literacy in Australia.

The plea to industry stakeholders follows a report last week by ANZ Bank, which found that Australians lacked knowledge in areas such as investment, superannuation and retirement planning, despite having good basic financial skills.

ASIC chairman David Knott argues for a national partnership of stakeholders in the industry to bridge the gap in areas where people’s understanding is lacking.

“The ANZ survey shows that improving financial literacy levels cannot be achieved by one sector or organisation alone,” Knott says.

ASIC is exploring the possibility of creating an independent body made up of representatives from regulators and the financial, education and community sectors, to help improve the financial literacy of young Australians.

“We would like it to have a broad reach, so that it not only covers schools but will also target the groups in our society who need it most,” Knott says.

“It will require the combination of many different stakeholders to champion the importance of financial literacy.”

ASIC has commissioned a curriculum map of the opportunities that currently exist for financial literacy education in Australian secondary schools.

Its research and possible models for a new independent body will be put forward in a discussion paper in June.

ASFA chief executive Philippa Smith says Australians continue to have poor understanding of superannuation fees and underestimate how much they will need to live on in retirement.

Smith says this clearly indicates that the Federal Government needs to double its effort and support for public education before choice-of-fund legislation can be introduced.

“The reason that people are not financially literate about super is simple: it’s a complex topic which they find difficult and confusing,” Smith says.

“Better and standardised disclosure documentation that is easier to understand, and sufficient funding for public education in the event of choice-of-fund are all prerequisites to improving financial literacy,” she says.