external barriers to exercising financial management skills, such as economic abuse, income inadequacy and complex consumer markets and the need to reduce shame around financial hardship in the face of these barriers the social and personal context of financial behaviours and attitudes, for example, gender and socio-economic stereotypes about financial management abilities the as a barrier to financial wellbeing, as people on low incomes can be ‘poverty premium’ forced to pay more for goods and services if they cannot buy upfront, buy in larger quantities or pay on time or online, or cannot afford higher priced but more affordable products, such as energy efficient appliances exploitative market practices and a lack of trust in consumer goods and services. We therefore welcome understanding of financial capability. However, elsewhere in the ASIC’s consultation paper ASIC states the 2018 strategy will focus more clearly on behavioural change, which could run counter to a financial capability approach. An over-emphasis on individual behaviour could neglect broader risk factors, and hinder efforts to increase financial wellbeing. A focus on individual behaviour could also see undue emphasis placed on people to be model consumers, and divert considerable time and resources into this task. While the strategy should foster agency in financial decision-making, it should also acknowledge the limits of people’s consumer engagement and empowerment, and ability to make decisions in people’s ‘good’ complex markets. In the face of entrenched barriers to engagement, such as language and communication barriers, digital exclusion, and competing household pressures, spending time and energy improving consumer engagement could be an inappropriate priority or an impossibility. The strategy should also acknowledge the limits of a financial capability approach and situate itself within a broader range of government actions that help achieve greater financial wellbeing among low-income and vulnerable households, including adequate income support payments. Promote affordable, accessible insurance Recommendation Promote the affordability and accessibility of insurance products for people on low incomes ASIC proposes to promote three core individual behaviour changes. One of these is ‘managing money day-to-day’, including protecting assets with insurance. Having insurance is a protective factor for financial capability. People on low incomes are the most vulnerable to financial stress and hardship and are the least prepared to respond to cost-of-living pressures and other financially stressful life events. VCOSS
external barriers to exercising financial management skills, such as economic abuse, income inadequacy and complex consumer markets and the need to reduce shame around financial hardship in the face of these barriers the social and personal context of financial behaviours and attitudes, for example, gender and socio-economic stereotypes about financial management abilities the ‘poverty premium’ as a barrier to financial wellbeing, as people on low incomes can be forced to pay more for goods and services if they cannot buy upfront, buy in larger quantities or pay on time or online, or cannot afford higher priced but more affordable products, such as energy efficient appliances exploitative market practices and a lack of trust in consumer goods and services. We therefore welcome ASIC’s understanding of financial capability. However, elsewhere in the consultation paper ASIC states the 2018 strategy will focus more clearly on behavioural change, which could run counter to a financial capability approach. An over-emphasis on individual behaviour could neglect broader risk factors, and hinder efforts to increase financial wellbeing. A focus on individual behaviour could also see undue emphasis placed on people to be model consumers, and divert considerable time and resources into this task. While the strategy should foster people’s agency in financial decision-making, it should also acknowledge the limits of consumer engagement and empowerment, and people’s ability to make ‘good’ decisions in complex markets. In the face of entrenched barriers to engagement, such as language and communication barriers, digital exclusion, and competing household pressures, spending time and energy improving consumer engagement could be an inappropriate priority or an impossibility. The strategy should also acknowledge the limits of a financial capability approach and situate itself within a broader range of government actions that help achieve greater financial wellbeing among low-income and vulnerable households, including adequate income support payments. Promote affordable, accessible insurance Recommendation Promote the affordability and accessibility of insurance products for people on low incomes ASIC proposes to promote three core individual behaviour changes. One of these is ‘managing money day-to-day’, including protecting assets with insurance. Having insurance is a protective factor for financial capability. People on low incomes are the most vulnerable to financial stress and hardship and are the least prepared to respond to cost-of-living pressures and other financially stressful life events. VCOSS
SUB_171201_National-Financial-Literacy-Strategy_Final.docx