4 An integrated solution

4.1 The way forward

In Chapter 2, we saw the complexity of consumer decision making and the need to take a multi-disciplinary approach to problems. This is where the Taskforce put forward the Consumer Behaviour Model as a synthesis of the best approaches to these problems drawn from a wide range of disciplines.

In Chapter 3, we saw the disjointed nature of current consumer and financial education provision in Australia as well as the way in which other countries are tackling these issues through coordinated bodies or frameworks.

It is therefore the Taskforce’s conclusion that Australia is lacking both an effective framework for understanding consumer and financial literacy and an effective structure for improving information provision across sectors.

To solve the first part of this problem, the Taskforce proposes that the Consumer Behaviour Model be developed to serve as a framework for improving consumer and financial literacy. It is proposed that this development occur in a collaborative way across sectors in order for it to be properly ‘owned’ and supported by information providers.

This poses the problem of who would actually maintain the model or help facilitate this process. There is also the remaining problem of how cross-sectoral cooperation could be facilitated without any national structures or coordinating bodies.

To address this, the Taskforce proposes that the Consumer Behaviour Model be operationalised and maintained by a central coordinating body that has representation from all sectors. This body would have the objective of promoting and facilitating a coordinated and targeted approach to consumer and financial information in Australia.

The body would be a central location where disparate information could be brought together for access by consumers, intermediaries and providers alike through functions such as a clearinghouse website (where users could search for current information available on a topic — for example, everything available on superannuation).

It would also conduct ongoing research of consumer needs and the effectiveness of current information provision in meeting those needs. In economic terms, it would be a home for ‘demand’ side research on key consumer issues where education solutions are being targeted. This research would ensure effectiveness as well as efficiency (where it identifies programs that don’t work or those which duplicate other work). This would see it develop as a repository for best practice advice on how to target different groups within the community.

Finally, it would also have a focus on schools education and work with educators to raise the level of consumer and financial education taught in schools.

While establishing a dedicated body might seem like a natural element of any national strategy on consumer and financial literacy, the decision to recommend a body was not taken lightly by the Taskforce.

It would have been far easier for the Taskforce to propose a number of awareness campaigns around topical issues such as retirement savings and youth debt. However, the Taskforce was already aware of a large number of information campaigns already in place which were having varying degrees of success in addressing these issues. However, many of these programs were ad hoc in nature and short term in provision. It was in looking at these campaigns and similar campaigns before them that the Taskforce felt the need to take a more strategic and long term approach to consumer and financial literacy.

The Taskforce recognises that there are monetary costs associated with establishing and running a body. If the body is to be successful, it has to demonstrate real benefits to consumers, both in effectiveness of information provision and cost savings (through reduced duplication and partnering). It also must be able to wield influence without actually managing the activities of individual organisations.

These aspects are addressed in the body that is proposed by the Taskforce and are discussed in detail in this chapter. The operation of the Taskforce’s proposed body is perhaps best illustrated through Figures 4.1 and 4.2 which show the current landscape for information provision and the new landscape proposed by the Taskforce.

Figure 4.1 shows the current landscape which is characterised by:

• gaps in understanding current consumer needs
• gaps in understanding the factors behind consumer behaviour
• differing levels of effectiveness in information provision
• differing levels of information-sharing and cooperation between organisations
• differing linkages between formal information providers and the informal sources (family, friends, media) that consumers use for information.

Figure 4.2 shows how the establishment of a central coordinating body can improve the linkages between formal, informal and intermediary information providers as well as provide research on consumer needs and behaviour to ensure the effectiveness of campaigns by providers.

Figure 4.3 gives an overview of the functions of the coordinating body, both to consumers and information providers.

Figure 4.1

Figure 4.2

Figure 4.3

4.2 Putting the Consumer Behaviour Model into action through a central coordinating body

The role of the Consumer Behaviour Model

As has been shown, the current landscape in consumer and financial literacy is more of a ‘patchwork’ than a framework. As seen in Figure 4.1, in many cases, there is a significant mismatch between consumer needs and programs designed to meet those needs.

The purpose of the Consumer Behaviour Model is to act as a tool for building an effective and efficient match between the information program and the consumer problem. It is also a tool for determining whether information alone is sufficient in solving this need.

The role of the proposed coordinating body would be to facilitate this matching process. This would be done through an appreciation of the myriad of factors that lead to consumers making decisions in the marketplace. It would also be done in partnership with the diverse range of information providers who interact with consumers.

The harnessing of the Consumer Behaviour Model to a central coordinating body also recognises the need to approach these issues in a way which builds knowledge and effectiveness over time. The body gives the Model a home where it can be rigorously developed and measured in action across all sectors. It allows for the development of best practice approaches to key consumer issues through cross-sectoral input and multi-disciplinary approaches. It is a home for building knowledge and turning that knowledge into action.

While there may be numerous organisations, both public and private, which have expertise in one or a few disciplines related to consumer and financial literacy, there is currently no organisation which embraces a multitude of these disciplines. The Taskforce believes that future success in raising levels of consumer and financial literacy in Australia is highly dependent on having a permanent body which represents this all-embracing approach.

Figure 4.4: The Consumer Behaviour Model in action — strategy implications from George's Story

The Consumer Behaviour Model would be operationalised by a coordinating body in a number of different ways but is probably best illustrated through the example in Figure 4.4. This reintroduces the example of George, first seen in Chapter 2, and shows how the insights gained through the Model can be used by information providers to develop a strategy to target the many ‘Georges’ in the community.

Of course there may well be other strategies that could be more effective in addressing this particular consumer problem. The example above however is sufficient to illustrate that simply providing more information is not always the most effective solution to addressing consumer problems. Strategies need to be aimed at the right target audience (not necessarily the consumer, but perhaps also advisors, sales people, and so on), be delivered via appropriate channels, clearly communicate the intended message and be timely. This example also shows that business and government regulators have a role to play in delivering information to George at the point-of-sale.

Another way of seeing the Model in action is through its proposed role of coordinating national approaches to key consumer issues. For example, a national approach to scams education grouping together the work of government departments and regulators (Treasury, Department of Family and Community Services, state and territory fair trading offices, Australian Competition and Consumer Commission, Australian Securities and Investments Commission (ASIC)), community sector organisations (particularly those with elderly clients who are often most vulnerable to scams), relevant industry sectors (everything from the finance sector to the real estate industry) and the media. In this example, the Model could show the common elements that underpin most scams and how a consistent approach to education within each sector will ensure consumers understand the hallmarks of all scams, regardless of their current guise.

The structure

The Taskforce has proposed a possible structure, objectives and functions for the coordinating body. These are illustrated in Figures 4.2 and 4.3.

It is envisaged that the body would have a modest staffing level to perform its functions and be constituted at an executive level by representatives from the public, private, community, education and media sectors. This could be in the form of a board who would meet on a regular basis to make recommendations on key decisions that the body is facing in relation to its functions.

The Taskforce proposes that the body operate to a charter which would be outcomes focussed and which would provide guidance on how the body achieves those outcomes.

The Taskforce has not settled on a recommendation for the ownership of the body or of its funding but would envisage that the body have some level of baseline funding from the Government and receive contributions from the private sector for industry-specific initiatives.

It is also important that the body have proper governance procedures and be subject to a review process to ensure it is properly performing its functions and meeting its objectives.

Objectives and functions

The objective of the body would be to improve the effectiveness of consumer and financial information and education in Australia.

To achieve this objective, the body would have the following functions:

• develop and facilitate the take-up of the Consumer Behaviour Model as a framework for all information providers
• conduct research on levels of consumer and financial literacy using the Model
• provide a clearinghouse for consumer and financial literacy information; that would maintain an up-to-date stocktake of consumer and financial literacy activities and provide a quick reference guide to assist both consumers and providers to be better informed about the services that are available
• provide an accreditation service for consumer and financial literacy information to be used in schools
• conduct community awareness campaigns on important consumer issues
• provide a modest grants program (approximately $500,000 in total) to build the capacity of activities that demonstrate a strong ability to improve consumer and financial literacy
• encourage private sector participation in consumer and financial literacy activities, particularly by partnering within community and public sector service providers
• through all of the above functions, promote a coordinated and targeted approach to consumer and financial information and education.

All of these functions would be the ongoing responsibility of the body. This is a major factor behind the Taskforce’s view that a new coordinating body should be established and given the responsibility for delivering on these functions over the longer term.

However, the Taskforce also recognises that should a strong framework develop between information providers that no longer requires the coordination of a body, then that body may no longer be necessary.

As these functions require the support of a broad range of stakeholders across the public, private and community sectors, it is the Taskforce’s view that the body needs to be properly representative of the broad range of stakeholders, and not driven by any one sector or organisation.

This is also important in engendering consumer trust. It has been noted that consumers tend to gravitate to information sources they consider to be independent and trustworthy.

This is also true for those who assist consumers such as community workers and teachers. As is noted in the Curriculum Corporation report into ‘Consumer and Financial Education in Australian Schools’ (Curriculum Corporation Report) (Appendix 4), there is already some resistance from teachers to using education resources from individual corporations or industry sectors due to issues (and perceptions) relating to trust.

The remainder of this chapter provides more detailed information on key functions of the body including:

• Developing the Consumer Behaviour Model
• Measuring and benchmarking improvement in consumer behaviour
• Providing a clearinghouse website for consumer and financial information
• School education
• Conducting consumer awareness campaigns
• Building capacity amongst community information providers
• Facilitating partnerships.

Development of the Consumer Behaviour Model

The Consumer Behaviour Model brings an innovative and dynamic perspective to understanding the factors that influence consumer and financial literacy.

It is a generally accepted, but often overlooked fact, that consumer decisions are influenced by much more than a consumer’s ability to read and understand information.

If information is to be effective in bringing about positive behavioural changes, there has to be a number of motivating factors built into the information.

Similarly, if our goal as information providers is to assist consumers to achieve a level of financial competence, then we need to be aware of what it takes to be a financially competent consumer. The Consumer Behaviour Model takes this approach a step further by recognising that the decisions consumers make, and therefore the skills they require, vary according to stage of life.

At this stage the Model is illustrative only and needs to be further developed if it is to become a useful tool for information providers.

The coordinating body would be well placed to develop a conceptual model and framework into a working best practice guide for information providers. An important part of this process is seeking the views of information providers in the field and testing the Model with a representative cross-section of consumers. In that regard, a key role would be to link the Model to information providers in an ongoing way.

Measuring and benchmarking improvement in consumer behaviour

While there is a diverse range of quantitative and qualitative data on consumer and financial literacy, there is a need for a nationally consistent and comparable data set to support the development of the Consumer Behaviour Model.

In turn, this would enable the body to raise public awareness about levels of consumer and financial literacy, as well as assist information providers to identify priority areas.

It is expected that the measurement model would need to draw on a number of data sources to reach an assessment. A useful starting point for this work is the ongoing ANZ Bank financial literacy survey. This survey could potentially be expanded to include consumer literacy more generally, and to include school children and young people under the age of 18.

Providing a clearinghouse website for consumer and financial information

One key function of any body established to provide a strategic framework to the promotion and distribution of consumer and financial literacy resources would be to operate a clearinghouse or centralised repository for education or information resources.

As a starting point, the clearinghouse would develop and maintain the stocktake of consumer and financial information which was presented in the discussion paper and publish, by website and in hardcopy, a quick reference guide to assist consumers to more easily navigate to the consumer or financial information or service they require.

The clearinghouse website would also enable consumers to quickly find information relevant to their needs through a tailored search engine which could access information based on a person’s age, interests, needs or preferred format.

The advantages of a clearinghouse would be:

• increased public awareness about, and ease of access to, consumer and financial information
• a greater ability for resource developers to see where there are gaps or overlaps in the provision of consumer and financial literacy resources
• a centralised point for those who assist consumers (educators, trainers, consumer advisors) to locate materials for delivering consumer education.

The idea of a clearinghouse website is not new. As has been seen in Chapter 3, it has been adopted successfully in a number of overseas countries and within different sectors in Australia.

School education

The Curriculum Corporation Report (Appendix 4) provides the body with an excellent basis for facilitating consumer and financial literacy into Australian schools. Curriculum Corporation is an independent company owned by Commonwealth and state and territory Ministers of Education.

This report builds on the work of ASIC, who, in their Financial Literacy in Schools discussion paper, showed the need to better integrate the teaching of financial literacy in the school system.

The Curriculum Corporation Report includes both a comprehensive mapping of opportunities for including consumer and financial education into existing subjects, as well as a list of best practice approaches to assist organisations preparing material for use in school curricula.

While the Taskforce supports consumer and financial literacy as a subject in its own right, it recognises that the school curriculum is already overcrowded, and in light of the amount of time required to change current curricula, a more practical approach is to facilitate consumer and financial education through existing subjects.

In order to do this, the body would need to consider a number of issues including which subjects would best accommodate consumer and financial literacy strands, the level at which it should be taught, the type of teacher training and support, the best medium for delivery (for example, print, Internet), alternative modes of learning (such as enterprise education), and evaluation of educational materials.

The Statements of Learning which are currently being developed for the Ministerial Council on Education, Employment, Training and Youth Affairs’ National Consistency of Curriculum Outcomes Project, are another vehicle within which the financial literacy focus could be integrated. A useful guide is the work and methodology developed by the Personal Finance Education Group (pfeg) in the United Kingdom (UK), which seeks to work with teachers in developing materials and building their capability to teach children about money issues.

It is proposed that the body also take on a role similar to that taken on by pfeg in accrediting third party material for use in the school system. As has been seen in the UK, this has resulted in a greater trust and thus take-up by teachers of materials developed by the finance sector.

Conducting consumer awareness campaigns

A modest part of the body’s budget (possibly $1-2 million per annum) could be used to support or initiate innovative community awareness campaigns that draw on the research conducted into key consumer priorities.

For example, if a priority was found in the area of retirement savings, a campaign could be undertaken to promote better engagement by consumers. This would be discussed with relevant stakeholder organisations and agreement would be sought to promote key messages across sectors. Also, while the campaign may have base funding by the body it would be open to others, particularly those from the private sector and government, to build on its resourcing.

In addition, the creation of the body itself would be expected to elevate consumer and financial literacy as an important issue in the community.

Building capacity amongst small information providers

The Taskforce has recognised the importance of widening the scope of smaller consumer and financial literacy initiatives that are clearly demonstrating a positive effect in the community.

The body, through a modest grants program (approximately $500,000) could look to target those who are providing positive role models for disadvantaged consumer groups in the community as well as for those who have taken successful innovative approaches that, with financial assistance, could have application at a national level.

The provision of capacity-building grants is based on the Taskforce’s strong belief that it is inspiring individuals who often make a difference in people’s lives. This can be anything from a rural school teacher who has a passion for improving financial literacy amongst her students to a community worker who has hit upon a new way of encouraging low income families to better manage their money.

Facilitating partnerships

The Taskforce has found broad support from all sectors for a more collaborative approach. The number of information providers and activities identified by the stocktake alone suggests that this is an area that could benefit from partnerships.

As well as identifying potential partnerships, the body could be an independent arbiter that could deal with concerns that may arise, especially in partnerships between business and the community and education sectors. In a similar way, the school accreditation service provided by the body could be expected to promote private sector funding and production of consumer and financial information for use in schools.

Feedback The Taskforce is proposing that a coordinating body be established to promote and facilitate a coordinated and targeted approach to consumer and financial information in Australia. The body could aim to achieve this through the development of the Consumer Behaviour Model into a tool that can be used by service providers. The body could also be given a number of other functions to do with consumer and financial literacy that are currently not implemented in a comprehensive and coordinated manner. These include: research, a clearinghouse, an accreditation service to enable consumer and financial literacy to be incorporated into the school curriculum, an ongoing awareness campaign, a capacity-building grants program, and a partnerships program. Is a coordinating body necessary? Should it be Government or industry funded? What functions should it perform?

Return to Contents
Previous - Chapter 3 - The Information Provider
Next - Feedback