The Role of (Press) Media in Promoting Financial Literacy and Consumer Protection By Festus Akanbi Business Editor, Thisday (Sunday) A paper presented the 2013 FICAN Workshop, organised by the Nigeria Deposit Insurance Corporation (NDIC) Akwa Ibom State Uyo, on Monday, December 2, 2013.
The Chairman for this session, my distinguished colleagues, all other protocols are duly observed. The topic for discussion is The Role of (Press) Media in Promoting Financial Literacy and Consumer Protection.
When I was given this topic on Sunday evening, the question that came to mind was why the emphasis on Financial Literacy and Consumer Protection, given the fact that similar topic was treated in one of the seminars that took place in Jigawa last year.
Ladies and gentlemen, the answer came up immediately. As the financial regulators keep changing the rules in the system, it behoves on us to rise to the occasion by educating other members of the economic community of the implications of such policy changes.
By doing this, we will achieve two basic things. First, Nigerians (our readers/viewers or audience) will know what opportunities are there for them and secondly, they will be in position to lay claims to their rights.
But in our discussion today, two words are key-Finance and Literacy. Investopedia defines FINANCE as the science that describes the management, creation and study of money, banking, credit, investments, assets and liabilities.
Some prefer to divide finance into three distinct categories: public finance, corporate finance and personal finance. Literacy is the ability to read and write. The United Nations Educational, Scientific and Cultural Organization (UNESCO) defines literacy as the “ability to identify, understand, interpret, create, communicate and compute, using printed and written materials associated with varying contexts.
Literacy involves a continuum of learning in enabling individuals to achieve their goals, to develop their knowledge and potential, and to participate fully in their community and wider society.
OUR BEAT Our beat is finance and that is why most of us in this hall are journalists who cover the finance and economy related issues and events apart from the editors who preside over the entire business desks of their respective newspapers, radio and television stations.
One of the questions posed by a colleague yesterday was how adequately prepared are we today to carry out the responsibility of educating the people on the concept of financial inclusion which the regulatory authorities like the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) are championing today?
The reality today is that many of us no longer go beyond normal reporting. When policies are churned out, what we see in the media these days are breaking news. We seem to forget the fact that Nigerians are looking for indepth analyses on some of these issues. If we are to comment on the current trends in our beat, I want to believe we are most likely to focus on the problems of consumer welfare in the financial sector.
Lack of financial literacy and ignorance of rights and obligations emanating from relationships with financial institutions on the part of consumers has been identified as a major cause of the problems of consumer welfare in the financial sector.
The lack of a comprehensive legal framework for financial consumer protection, prolonged existence of unethical practices unabated amongst financial institutions, consumer financial ignorance amongst others have led to the accumulation, over time, of general dissatisfaction, complaints and has continued to impact negatively on the level of confidence in the financial sector.
Profitable Lessons One of the most important and profitable lessons you can learn in life is how to achieve financial security. Yet, only a few of us have had the opportunity to learn the basics principle of money in school, at work, or at home.
Today, there are more Nigerians investing in the stock market. But these numbers have a flip side. What about those Nigerians who aren’t investing or saving? How do they plan on achieving financial security? And what price will Nigeria pay if they do not? There are times when we should look at the glass and say, why is it half empty?
The plain truth is that we are in the midst of a financial literacy crisis. Too many people don’t know how to determine saving and investment objectives or their tolerance for risk. Too many people don’t know how to choose an investment, or an investment professional, or where to turn for help.
In the past, the problem was a lack of information. Today, there is a glut of information. But the irony is: Do people have the foundation in the financial basics that will allow them to use that information?THE MEDIA With the explosion of finance-related sites on the Internet, the individual investor has more access to information than ever before information that up until a few years ago was available only to securities professionals.
We have business reports on radio and on TV. These days, financial news is a major ingredient of virtually every major bulletin in the electronic media. A number of financial institutions are also partnering with some online media platforms to reach their audience. FINANCIAL LITERACY *The financial literacy message should jump to the front page. It’s not enough to reach out only to those who already read the business papers or those who watch the financial news networks. What about those who don’t? Let’s deliver the message where it needs to be heard and in a way that will make folks listen.
We’ve seen that financial literacy education can make a difference in people’s lives. In fact, a recent study by the National Endowment for Financial Education in the US found that just 10 hours of financial literacy instruction will prompt most teenagers to start saving.
Even with little personal knowledge, individuals can avoid making mistakes by consulting with those who are more knowledgeable, including financial professionals. It is not enough to recognize that financial knowledge is low; we must also understand whether financial literacy matters in decision-making.
In a world of increased individual financial responsibility, where workers are in charge of their financial well-being and where financial markets offer new and complex financial products, financial literacy is essential. Just as it has proven to be impossible to succeed in the modern world without the ability to read and write (literacy), so it will be impossible to succeed in the present-day financial system without knowing the abc’s of economics and finance (financial literacy).
Consumer Protection Section 2(d) of the Central Bank of Nigeria Act 2007 (CBN Act) empowers the CBN to promote a sound financial system in Nigeria. This entails ensuring the maintenance of a sound and stable financial system.
A key aspect of this function is the development of adequate consumer protection and enlightenment activities to not only protect consumers but also engender confidence amongst the banking publics in the financial system as well as the effectiveness of the regulatory mechanism.
The current realities of Financial Services provisioning world over is that it is only when the welfare of consumers is given proper attention that we can both restore investor confidence and also promote a strong and stable economy.
Within the 21 months of its existence, the Consumers Protection Office CPO has received well over 3,000 complaints against financial institutions from consumers. Pursuant to resolving these complaints no less than 5,000 mails, telephone calls, SMS and email correspondences had been sent to the CBN by the public. .
Furthermore the CPO had facilitated the refund of well over N4.5 billion to aggrieved consumers including refunds in key international currencies. Consumers of Financial Services had over time suffered regulatory neglect; this gave room for the proliferation of unethical practices amongst financial institutions.
These institutions were more focused towards advancing their pecuniary interests at the expense of their consumers. There was therefore continued growth in consumer dissatisfaction which culminated in the rise of consumer complaints against banks and other financial institutions.
In view of the above, the Consumer Protection Office (CPO) was created within the Financial Policy and Regulation Department (FPRD) to not only ensure that consumer protection is given the required attention that it deserves but also enable financial services regulation in Nigeria align with international best practice.
From its inception in March, 2010 to date the CPO has embarked on several activities aimed at achieving its mandate of driving the consumer protection processes of the CBN. THE FINANCIAL JOURNALISTS One of our responsibilities is to interpret government policies, especially the finance-related ones. A quick example is the nation Monetary Policy from time to time.
It our responsibility to go beyond the ritual of announcing the prevailing monetary policy rates, but we should go a step further by educating our readers/listeners on how such will affect interest rates regimes in banks. We should be able to come down to the level where bank users will know whether it is more profitable to save when a new MPR is announced.
Because it is also our responsibility to educate, finance journalists should also lead the campaign in smoothening bank-customer relationship. For instance, the media should be at the fore-front of a campaign like that of e-payment and cashless policy.
Our responsibilities should also include helping our readers/audiences to keep track of government policies implementation and full impact of policies on savings, investment and general wellbeing of an average Nigerian.
We should help bridge the gap between the consumers and the financial sector operators through our analytical approach to our duties. Our writing should be laced with clear explanation of key issues as they affect the overall interest of the consumers and the larger society. We should do more of follow up on issues that we had reported in the past, but which remain relevant to the day to day living in the society. Certainly, the ball is in our court.