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Financial Literacy 'Critical Protection' For Consumers

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Financial literacy is a "critical line of defence" for consumers, the Central Bank's governor said yesterday, unveiling a partnership with the Clearing Banks Association (CBA) to educate Bahamians on debt management.

Launching the campaign, John Rolle said that based on the findings of a 2018 survey of 'customer satisfaction' with the commercial banking industry, conducted by the Public Domain firm, there was a need for more education on savings and personal debt management.

"The Central Bank recognises the need to educate consumers more on personal finances, financial products and the economy, especially in the context of increasingly vocal concerns about the cost of banking services and the ease of access to banking services," he said.

"The Central Bank believes that literacy is an empowering and critical line of defence for consumer financial protection. We want the users of financial products and services to ask the right questions about products and services they receive, under their legal rights to be empowered to make responsible choices around savings and borrowing, and to be able to conduct their affairs safely and securely - especially in the digital world."

Mr Rolle added: "Since this campaign was conceived we have benefited from the results of a survey on financial literacy, which the bank co-sponsored with Public Domain. Although most Bahamians have access to savings accounts they are not using them necessarily to accumulate funds, but rather they are just serving the basic purpose of storing money which is spent almost immediately.

"We know that from the results of the survey much more consumer education is needed around how interest rates aid our ability to build up savings over the long-term, and we understand that much more attention is needed, much more education is needed, around personal debt management."

Mr Rolle said the campaign aims to equip Bahamians of all socio-economic backgrounds with the knowledge and confidence they need to make sound financial decisions. "We especially want to encourage a strong culture of personal savings and reinvesting. This ties into a shared national goal of keeping the value of the Bahamian dollar on par with the US," he added.

"This is because savings translate into more prudent use of foreign currency, and that foreign currency helps us to support the value of our currency. This campaign will have a special segment on banking products and services to help the public learn on how to borrow and how to use credit wisely.

"We will also provide education on how to conduct transactions in a safer and more secure fashion, especially given the increasing importance of electronic commerce, online banking and electronic money, which are all pushing us along the desired path of being less dependent on physical cash in our daily lives."

Gregory Bethel, president of Fidelity Bank (Bahamas), said each of the clearing banks have been given the results of the survey. "They will have to make their own business decisions on how they will improve customer service, communicate their business plans and their strategies, so the public can understand what they are doing and why they are doing what they are doing.

"It's great when consumers speak up because it makes the decision makers aware of their challenges, so that they can address them and communicate with them. What we need is more engagement between the banks and customers of the banks. I am hopeful that this initiative will improve the commutation between the banks and customers. The banks have the challenge of reducing cost and increasing revenue."

Mr Bethel added that cost was a major challenge for commercial banks. He added: "I was in South Andros last week doing a financial literacy programme for the high school students, and as I drove around each settlement it was clear that there was not enough people there to cover the cost of a fully operating branch every day.

"There are not enough people. There needs to be this communication as to why banks are cutting back. It's simply a matter of cost. If you're not making money in business you go out of business."

Nicholas Higgs, a research analyst at CFAL, said the goal of the financial literacy campaign is three-fold. "We want to firstly allow Bahamians to understand where they are at currently in their finances," he explained.

"The second step is to understand the landscape, the regulatory bodies, who you go to if you have questions about bank fees, insurance or if you think you're being scammed. Thirdly, we want to look at what are the options for the future. If you don't have enough money in your pension account, what is your opportunity to grow this?"

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