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Labor's financial literacy plans.



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Media Release

SENATOR STEPHEN CONROY ALAN GRIFFIN MP

DEPUTY LEADER OF THE OPPOSITION IN THE SENATE SHADOW MINISTER FOR CONSUMER AFFAIRS SHADOW MINISTER FOR FINANCIAL SERVICES

22 February 2004

LABOR’S FINANCIAL LITERACY PLANS

Labor is committed to improving the ability of consumers to make sound choices in managing their finances by firstly, improving financial literacy and secondly, ensuring appropriate disclosure in relation to financial products and services.

Hardly a day goes by without a new revelation of consumers getting into difficulty due to financial scams or rising personal debt. These are just symptoms of a wider problem. This problem includes inadequate regulation, aggressive marketing practices, complex products and significantly low levels of financial literacy.

Labor believes that by improving financial literacy, consumers will be able to make informed choices about financial products.

To improve financial literacy we need to improve financial education. Financial education must start at school. Labor will work with State and Territory Governments and key stakeholders to ensure that financial literacy is a key part of the education curriculum and that a nationally consistent approach is taken.

In addition, Labor will establish a financial literacy taskforce to bring together key stakeholders including financial institutions, consumer groups, educators, government, unions and regulators to promote financial literacy. Key objectives will include ensuring that consumers are able to:

− understand key investment concepts like risk and return; − understand and minimise the amount of fees and charges that they pay; − manage credit, and − access dispute resolution procedures if things go wrong.

However financial education alone is not enough. It needs to be teemed up with tougher regulation and improved information about products. The myriad of fees and charges and complex contracts means that even financially literate consumers find it hard to get the information they need to make the best choices.

Even the financial industry accepts this. The Chief Executive of the Investment and Financial Services Association (IFSA), Doug McTaggart has said that:

“I am concerned that our industry will be seen to have created a supply driven monster that is out of control. A monster that has too many product features, too many different types of fees and too little effective disclosure.”

Labor has proposed a range of measures to assist consumers, including credit card "Health Warnings" which would inform the consumer how long it would take them to pay off their credit card if they only pay the minimum amount.

Financial education needs to be available to everyone. Labor is committed to a new approach that will empower consumers to take charge of their financial future, no matter their age or economic status.

For further information please contact: Alan Griffin: 0419 353 476