The NBU’s mandate in financial literacy and protection of consumer rights in financial services has been legally defined. Amendments to the Law On the National Bank of Ukraine that will entitle the NBU to improve financial literacy of the public were voted “for” by 309 members of the parliament.
Granting the NBU the authority to take financial literacy actions will foster sustainability and consistency of the associated government policies.
The NBU considers financial literacy primarily as a stepping-stone to establishing financial capability and behavioral change. This requires long-term efforts in line with a specific approach, as well as transparency, accountability for the use of resources and measurability of targets. Also, a broad variety of partners will be engaged, including coordination programs and international assistance.
“A direct mandate for financial literacy confirms the obligations the NBU has assumed as the leader at the national level. The NBU’s Strategy, the Comprehensive Program for the Development of Ukraine’s Financial Sector until 2020, and the draft of the Strategy of Ukrainian Financial Sector Development until 2025 list financial literacy as the key component for improvement of the financial literacy of citizens,” NBU Governor Yakiv Smolii noted.
The direct mandate for financial literacy actions is delegated to financial regulators of the world top countries in economic development, human capital, and financial literacy, as Canada, Japan, the UK, and Australia.
Creating a single system comprising efforts in improving financial literacy and protection of consumer rights in financial services as set in G20 High-level Principles on Financial Consumer Protection. Such system within one institution with legal mandate for actions in the aforesaid areas will foster coherence or actions, the quality of resource allocation, streamline the reporting mechanism, and produce synergistic effect. Along with expanding financial inclusion this will advance welfare of the public.
Being the financial sector leader the NBU has drawn up and presented in June 2019 the vision of the Strategy for Financial Literacy that is intended to uniform, coordinate and combine efforts of the state agencies, business and the civic society for improving financial literacy at the national level.
“We’ve received positive feedback from the stakeholders, and the vision, mission, and priorities of the Strategy were supported and approved by state agencies that are members of the task forces on drawing up the Strategy of Ukrainian Financial Sector Development until 2025, a number of NGOs, the expert community, and educational institutions. A long way lies ahead, since long-term goals, financial inclusion, and financial literacy can be reached only through the coordinated effort of different stakeholders and partners,” noted Nataliia Bondarenko, Director of the Communications Department.
The vision of the Strategy is based on the results of a number of strategic sessions held with multiple stakeholders, successful practices of leading countries on financial literacy, survey of the level of financial literacy in Ukraine based on the international methodology of the Organisation for Economic Co-operation and Development.
Key 5 priority decisions of the Strategy:
- to change financial culture
- to make Ukrainians financially aware
- to focus on the youth
- to create a single communication platform
- to set up an Information and Communications Center.
For reference:
Financial literacy is an important prerequisite of financial inclusion, since it allows financial service consumers to use their potential to the fullest.
The NBU identified financial inclusion as one of its strategic goals to be achieved through establishing and developing a consumer protection system, a national strategy, and measures to improve the financial literacy of Ukrainians, as well as promotion of the cashless economy.
The Law of Ukraine On Amendments to Certain Laws of Ukraine Regarding Protection of Consumer Rights in Financial Services will advance safeguards of consumer rights in financial services.
The Law will put the NBU in charge of protection of consumer rights in financial services and provides it with instruments to regulate financial market participants’ behavior in relation to clients. One of the Law’s major novelties is mandatory disclosure of information regarding the real value of financial products and services.
Also, the law will eliminate hard-selling of redundant services by financial institutions, making changes to core terms of loan agreements, as well as transferring personal data to third parties without advance notice or in a unilateral manner.
More information on the NBU’s mandate on protecting consumer rights in financial services.
Financial inclusion means creating conditions that encourage all segments of the population to use various financial services that are accessible, affordable, regulated, and fitting for their needs in order to stimulate the country’s economic growth and reduce inequality in society.