Remarks by Olivia Davids
Making Education Aspirationally Relevant
Good morning, Ladies and Gentlemen!
The Financial Services Board (FSB) is the statutory regulator of the non-banking financial sector in South Africa and carries out its functions in terms of the Financial Services Board Act No 97 of 1990 in the public interest. The FSB regulates the insurance industry, retirement funds, collective investments and financial advisory and intermediary services. In addition, an Enforcement Committee addresses market abuse issues. A Consumer Education Department was established in 2004.
The FSB Act was amended in 2000 to provide the FSB with a mandate to:
…promote programmes and initiatives by financial services institutions and bodies representing the financial services industry to inform and educate users and potential users of financial products and services…
Why do we need financial education?
Reasons for the importance of financial education have been well documented in the recent past. Just by way of summary, the complexity of financial products; the increase in the number of financial products; increases in life expectancy; changes in pension arrangements with many countries shifting from defined benefit to defined contribution plans in which the risk is transferred to the consumer and, low levels of financial literacy are some of the factors which point to a critical need for coordinated, accountable, measurable consumer financial education initiatives.
Why the formal education system?
We are often told that our values, attitudes and behaviour as adults are shaped at a very early age. We are also told that children, if well taught, do know the difference between right and wrong before or by the age of seven. We also know that children nowadays have pocket money which they may either spend or save; some of them are being given credit cards by their parents to use for various purchases – the parents are responsible for paying the bills, though. There are those who drop out of school for various reasons and find that they are totally unfamiliar with the real world out there. Finding and keeping a job, managing money and making it last for two weeks or a month, not understanding how pension funds work or what unemployment insurance means or income tax are issues that many adults grapple with so how much more critical isn’t it for youth to have this information as they start their financial lives.
A survey on young people and financial matters conducted in France, in 2007 showed that the majority of youth surveyed overestimated their knowledge about control of money matters and how to budget, save or contact the bank. In addition, their knowledge about pensions and insurance was found to be inadequate. They were also afraid to talk about credit.
The Organisation for Economic Co-operation and Development (OECD, 2005) has drafted Principles and good practices for financial education and awareness. In the section on Public Action for Financial Education, countries are encouraged to include financial education in schools. The good practice states:
…9. Financial education should start at school. People should be educated about financial matters as early as possible in their lives.
What is the FSB doing about the financial education of youth?
The FSB identified the formal education sector as a key area for creating awareness about financial literacy and consumer education. We were keen to promote and initiate programs which will see learners exit the schooling system with sufficient information and skills that will enable them to take responsibility for their financial future and make considered decisions and know how to act when things go wrong.
In 2003, the FSB together with other stakeholders presented their recommendations to the Department of Education to include financial education in the National Curriculum Statement for South Africa. It was recommended that financial education be incorporated into various subjects such as economics, business, accounting, and mathematics and life orientation. This recommendation was implemented, although there is no policy requirement for financial education to be taught in the schools.
Discussions with the Director-General of the Department of Education pointed to the need for teacher development in the management of personal finances. Teachers had difficulty finding financial education content for their lesson plans and felt they did not know enough about the subject to be able to teach the students effectively. The Director-General provided the FSB with a list of possible initiatives that would be effective in strengthening the financial education of students in schools. The major priority identified was the need to make available to teachers immediately usable resources such as actual lesson plans for identified learning areas and subjects, drawn up in line with curriculum requirements including learning outcomes and assessment standards. The identified learning area was Economic and Management Sciences (Grades R – 9, ages 6-15), and subjects were Mathematical Literacy and Life Orientation (Grades 10 -12, ages 16-18).
TEACHER RESOURCES
The FSB in partnership with the South African Insurance Association proceeded to oversee the development of financial education resources for teachers. Mathematical Literacy resources, including lesson plans and posters for Grades 10, 11 and 12, were prepared. The key to the success of these resources is that they are in the form of lesson plans which are based on South Africa’s National Curriculum Statement and are readily usable in the classroom. Furthermore, teachers were provided with opportunities to engage with the materials in workshops around the country and to provide input into the usefulness and appropriateness of the materials. Moreover, the Department of Education played a major role in assisting with reviewing and quality assuring the materials to ensure that met the curriculum requirements. The appearance of the Department’s logo on our materials makes them very attractive to educators as they have the assurance that the materials have the approval of the Department.
DIGITISATION OF CONSUMER EDUCATION BOOKLETS
Another partnership project involved the alignment of the three FSB consumer financial education booklets with the National Curriculum Statement in keeping with the Economic and Management Sciences (EMS) curriculum for grades R – 9 as well as Mathematical Literacy and Life Orientation for Grades 10 – 12. These materials were digitised on to CD-ROM resulting in an interactive resource which can be accessed by teachers with a voice over facility and cartoon characters available to learners. The CD-ROM format is supported by four booklets covering each of the phases of the EMS curriculum. This project was undertaken as a partnership among the Financial Services Board, the South African Insurance Association and the Financial Services Consumer Education Foundation.
FINANCIAL GUIDE FOR YOUTH
A resource specifically for youth between 18 and 22 years of age was developed and includes information on opening a bank account, debt management, the unemployment insurance fund, income tax, life insurance, savings, budgeting, etc. Workshops on this booklet were completed with high school and university students as well as youth who were newly employed.
CAREER FAIRS
The FSB participates in career fairs and uses these opportunities talk to students about the importance of being aware of the need for personal financial management when starting careers or in the world of work.
Lessons learned
From our experience, the following were crucial elements that contributed to the successful implementation of consumer education in schools:
1. We successfully engaged with the Department of Education (DOE) at national as well as provincial levels and involved them in these projects from the start.
2. The DOE appointed staff from their curriculum development unit to work with the FSB and our partners
3. The DOE provided a letter of support for these projects which assisted access to provincial departments and schools.
4. The resources developed were designed to be entrenched in the curriculum and were prepared according to curriculum requirements. The resources were not “add-ons” which are often not used.
5. 4 out of 6 professional staff in the Consumer Education Department is qualified school teachers with experience in all levels of formal education as well as in adult education. Thus we can interact with departments of education in the “language” of the department and have an understanding of how the education system works in our country.
6. The financial education resources were developed by those in the field i.e. teachers and education officials, together with financial sector practitioners.
7. All material is neutral with no marketing or mention of specific brands.
8. Resources are not just handed out, but distributed as part of a workshop where trained facilitators can show teachers how to use the resource in the classroom.
9. Use “professional development” of teachers with respect to financial management to help overcome the hesitancy about engaging with the students on these sometimes complicated concepts.
10. Resources are also workshopped with district, provincial and other support personnel from the DOE.
11. Monitoring and evaluation systems were put in place at all phases of development, print, distribution and dissemination and implementation. Here the DOE also played a crucial role through feedback form its support personnel.
What is happening elsewhere?
An OECD survey which is currently in progress and which deals with the prevalence of financial education in schools as well as other policy and structural issues around this topic found that out of 31 countries that responded, 17 said that financial education was taught in schools, while 14 said it was not. There is a wide variety of interventions but the matter of evaluating the success of financial education programmes in the schools remains a challenge.
ACTIVITIES
Mexico has introduced a safety week at schools to teach students about the importance of insurance. Japan, again on the subject of insurance, has established a programme on the importance of disaster prevention. In Germany partnerships have been established to enhance the integration of financial education into school curricula. Teachers’ manuals are also being produced as well as courses for secondary students and on-line financial education programmes. In the UK, the FSA has produced resource materials for teachers while in the USA there is a wide range of courses through universities and on CD-ROM. Poland has used media coverage for an annual competition for the best Masters or Ph.D research relating to insurance. This is done in partnership with the Insurance ombudsman. Mexico organises contests for research into insurance and prevention. Iceland has a computer game for elementary school students while only a few countries such as the UK and Malaysia have programmes for university students.
MATERIALS
Countries are producing a variety of resources in the form of games, print materials, internet programmes, websites, student competitions, films for use in the formal education system. Ireland has produced resources for students while South Africa and the UK have targeted their resources mainly to teachers.
What are some of the challenges in establishing financial education in the formal education system?
Early indications from the OECD survey on financial education in the formal education system which is currently in process are that a low level of subject knowledge and expertise of teachers was a barrier to the effective education of students. Other barriers mentioned were that there was insufficient time in the curriculum that financial education was not part of the examinations, there was a lack of resources, training was fragmented and staff turnover. In some cases financial education in the formal education system was not a priority for some national governments. There was also a lack of sustainable funding in other cases and the fact that whether or not financial education was taught in the schools depended on the school or the individual teachers.
Conclusion
The inclusion of financial education in the schools in a serious, sustainable and coordinated way is in its infancy. There is a need to review current practice and identify and implement workable and effective programmes to enable youth to deal with the complexities associated with money and finances. The challenges mentioned above represent opportunities for making this a reality.
REFERENCES
Financial Services Board (2009), Annual Report 2008, Financial Services Board, Pretoria
Financial Services Board (2009), List of projects and activities initiated and implemented by the Consumer Education Department at FSB, FSB, Pretoria, www.fsb.co.za
OECD (2005), Recommendation on Principles and Good Practices for Financial Education and Awareness, OECD, Paris.
OECD (2005), Improving Financial Literacy: Analysis of Issues and Policies, OECD, Paris.
OECD-US Treasury (2008), International Conference on Financial Education: Volume1 – Keynote addresses, interventions and main policy recommendations. Youth Financial Literacy: Development, Delivery and Execution of Programmes, OECD, Paris.
OECD (2008), Improving Financial Education and Awareness on Insurance and Private Pensions, OECD, Paris.
OECD (2009), Progress of the Work of the Expert Subgroup on Financial Education at Schools – Note and Oral Briefing from the Project Leader: Document for Discussion. Work in Progress, OECD, Paris
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