Financial services are becoming increasingly digital, with more and more daily, everyday transactions moving on-line or becoming cashless. The restrictions experienced during Covid-19 related lockdowns, proved difficult for those that did not have the ability to make payments for goods with cards, either in store or on-line. Access to financial services, now more than ever is key to inclusion in society. With the publication of the White Paper to End Direct Provision and to Establish a New International Protection Support Service committing to facilitating the opening of bank accounts for International Protection applicants - the Basic Payment Account - the spotlight is once again on the importance of financial inclusion.
Financial exclusion is not just about access to bank accounts but access to reasonable, affordable credit that takes account of the financial position of the consumer while cognisant of the need for people on low incomes to meet contingency expenditures without resorting to high cost credit, ‘pay day loans’ and ‘home credit companies’ which can charge APRs of up to 287 per cent. Illegal moneylenders are also in operation. Credit unions have traditionally provided low cost credit to members within their ‘common bond’ area charged at 1 per cent interest per month, or 12 per cent per annum. These loans are provided as an alternative to high cost credit from legal and illegal moneylenders for families having difficulties saving for life events such as a child’s communion, home improvements or the unexpected breakdown of an essential appliance.
A 2022 study by the Economic and Social Research Institute found that 6 in 10 people face unexpected expenses each year. Considering then that in 2018, almost four in ten people (37.3 per cent of the population) reported being unable to meet an unexpected financial expense, access to affordable short term credit or the ability to accrue savings in vital.
The Inaugural Central Bank of Ireland Financial Services Conference took place in November 2022 with the theme ‘Supporting the Economy, Delivering for the Consumer’ and noting “the importance of education for consumers...to help them make better …. decisions. Financial literacy is becoming increasingly important in the context of technological innovation”. Who provides that education is key so that it is not simply companies selling products under the guise of education or literacy or training.
The National Adult Literacy Agency (NALA) Report ‘Financial literacy in Ireland’ recommends ‘more education and training on financial literacy. This involves the development of literacy, numeracy and basic computer skills, which underpin everyday financial activities”. This will increase the skill levels of individuals to understand the financial products and services they engage with. However, the companies selling financial products and services also need to ensure that consumers fully understand the information they provide. An approach, similar to plain English is taken in the U.K. by Plain Numbers as they work with firms, changing the way information is conveyed to ensure increased comprehension of bills and financial contracts.
In light of the severity of its impact, Social Justice Ireland welcomed the inclusion of financial literacy in the Roadmap for Social Inclusion 2020-2025 and urges Government to build a module on financial literacy in to the primary and secondary curricula. It is incumbent on Government to track levels of financial exclusion and to build and monitor policies and practices aimed at eliminating it in its entirety by 2025. Also welcome is the commitment in the Report on the Retail Banking Review, published in November 2022, that Ireland should fulfil certain OECD obligations in the area of financial literacy and develop a national financial literacy strategy. The Department of Finance has been tasked with the development of this national financial literacy strategy and work is currently underway.