MF and CNB: Financial literacy of adults is surprisingly low

The financial literacy of adults in the Czech Republic is surprisingly low and consumers’ knowledge of the financial market needs to be significantly improved. This has been confirmed by the results of the first round of a comprehensive project entitled “Measuring Adult Financial Literacy in the Czech Republic”. Its results were presented today at a joint press conference by the Ministry of Finance (MF) and the Czech National Bank (CNB).

Data for the sociological survey were collected in September this year using a representative sample of 1,000 respondents. The survey methodology is based on foreign experience and OECD recommendations. The results will be used by the Working Group for Financial Education to propose specific measures to increase financial literacy.

“I didn’t expect a rosy picture, but it surprised me that the results of the survey were so terrible,” said Minister of Finance Miroslav Kalousek. “Almost two-thirds of people don’t read the contracts which they sign and in which they undertake to make payments for a long time. They are completely unaware of the potential devastating effects on themselves and their families,” he added.

“Not only do people fail to read and understand, but they are also unable to assess and calculate some basic things. Young people should learn to read and count at school and to take responsibility for their decisions in the family,” said Chief Executive Director and member of the CNB Bank Board Eva Zamrazilová. “The view that consumer protection can sweep the obstacles from their path on the financial market is absurd.”

The CNB has been actively promoting financial education for many years, as educated consumers manage their money responsibly and it is easier for them to avoid loss-making transactions in the financial market. Together with the Ministry of Finance and the Ministry of Education, Youth and Sports, the CNB is responsible for the National Financial Education Strategy. The measurement of financial literacy will enable the strategy to be focused on the biggest weaknesses.

For example, the results of the survey proved the CNB’s long-standing experience, based on consumer complaints, that contracts for sales of financial market products are often very complicated. In the survey, 43% of the respondents stated that they did not understand some passages at all. One-half of the respondents who said they did not understand some passages nevertheless signed the contract presented to them.

The Czech survey also included questions from an international OECD survey that will be used to publish a comparison between the participating countries at the end of 2011.

A summary of the main conclusions and the full wording of the final report have been published on the websites of the Ministry of Finance and the Czech National Bank.

(The summary and presentations are available in Czech language).