THIS country needs to re-examine its relationship with money, financial ombudsman Dominic Stoddard has said. “How can we be a financial centre if many of our citizens do not have basic money management skills,” Stoddard asked.
Everyone has “money scripts,” he said– internalised, unconscious beliefs about money: what it is, what it can do. These biases, often formed in childhood and reinforced by experiences, drive behaviour, leading to outcomes in terms of wealth, security, financial independence and poverty.
In response, the Central Bank, through the Office of the Financial Ombudsman, has launched a National Financial Education Committee. Members of the committee, who come from financial-sector organisations, met today to sign a memorandum of understanding at the Central Bank in Port of Spain yesterday, pledging to increase the financial literacy outreach.
“Money does not come with instructions, and for many of us, we need instructions, a manual, a crash course and a firm reprimand from time to time,” Stoddard said.
Financial literacy, though, often remains out of the reach of the ones who need it most, including the chronically ill and the differently abled; low-income earners; the unemployed, underemployed and partially employed; female heads of households; mature adults and pre-retirees; students, and even those who are fully employed but who are renting and struggling with a mortgage.
“We have a duty, nay, a responsibility, to come together in this common cause to fight against financial illiteracy,” Stoddard said. Twenty-one per cent of the population are unbanked, he said, and 44 per cent have “low financial capability.” Low financial capability measures a person’s ability to make ends meet; plan ahead for their financial future; and their knowledge of financial products. There is also, Stoddard said, a “deep and pervasive negative view of the financial sector.”
“(As Ombudsman) I see 1,000 complaints annually, most of which could have been avoided if the public had been properly informed, had the benefit of a financial-literacy session, had the confidence to ask the appropriate questions, and knew when they needed help or advice and where to seek it,” he said.
The committee, the idea for which began last August, will come into full force next week during Global Money Week. It’s not just a novelty, though, Stoddard was adamant that the committee will act, and will meet quarterly to discuss projects on improving financial literacy.
The eight other members of the committee are: Jason Clarke, vice president of the Association of TT Insurance Companies (ATTIC); Karen Darbasie, vice president of the Bankers’ Association (BATT); Central Bank Governor Alvin Hillaire; Administrator of the Tobago House of Assembly’s Financial Literacy Secretariat Denese Toby-Quashie; president of the Co-Operative Credit Union League Joseph Remy; TT Insurance Institute president Edweena Newallo-Dottin; chairman of the Securities Exchange Commission (SEC) Hayden Gittens and CEO of the Stock Exchange Michelle Persad.