Financial literacy organisation welcomed

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[UPDATED] A new initiative designed to raise the level of financial literacy in New Zealand has the backing of financial advisers – but most will not be involved directly.

Thursday, December 5th 2013, 6:23AM 3 Comments

Governor-General Sir Jerry Mateparae will be patron of The Exchange, a coalition of banks and financial services sector groups. It will work in co-operation with the Commission for Financial Literacy and Retirement Income.

The Commission will undertake research and work in schools and workplaces to improve financial literacy.

New Zealanders’ poor understanding of money matters is often blamed for the country’s level of underinsurance and lack of interest in KiwiSaver investments.

The Exchange will be advised by a council including Retirement Commissioner Diane Maxwell, chair of the Banking Ombudsman Scheme Miriam Dean, chair of the NZ Bankers’ Association Kirk Hope and the new chief executive of the Financial Markets Authority, Rob Everett.

It will have its first meeting next year.

Retirement commissioner Dianne Maxwell said when the idea was first mooted, they considered bringing in organisations such as the PAA, IFA and Financial Services Federation. But she said the group would have become too huge and unwieldy. 

Its members will be organisations that are part of the Bankers' Association and Financial Services Council.

But Maxwell said once the national strategy for financial literacy was set, the Commission would discuss with other sectors, such as advisers, how their groups could collaborate on other financial literacy initiatives, and what the Commission could do to support their goals.

IFA chief executive Penny Mudford said her organisation had been involved with other financial literacy initiatives such as Money Week, in which advisers offered free advice to people who called a hotline.  “We support the principles.”

The PAA said it had had initial discussions with The Exchange.

“The Association views the consortium as a positive addition to the Commission for Financial Literacy and Retirement – with which it works regularly on finance issues for New Zealanders,” a spokeswoman said. “The PAA looks forward to participating with the consortium following the release of the National Standards, on January 31, and supporting its activities designed to increase financial literacy in New Zealand.”

Consultant Russell Hutchinson said New Zealand’s Commission was very good in comparison to others overseas. “There are some real strengths in what they’re doing.”

He said the provision of generic advice by banks had dried up in Britain because of issues with regulation. That prompted the launch of the beleaguered Money Advice Service, which the country’s Treasury has recently said is not “fit for purpose”.

He said working with The Exchange could be a way to avoid that happening here. "Participating companies may be able to identify opportunities that could otherwise be missed, and bring skills to the Commission which might otherwise be difficult to access or employ. In helping to work on financial literacy objectives in the community in a non-business context they may also gain valuable insights which are applicable back in the business too."

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