EDITORIAL: Fighting fraud through education

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Financial products and services have evolved rapidly, making the industry more complex, but the public has failed to keep pace. The lack of knowledge of people has led to disorder in the markets and mistrust of financial players, as well as fraud. Regulators are imposing stiff penalties on those who profit from consumer ignorance, but people need to be better informed about financial services.

Taiwanese have a high level of education, but the country has a low score in financial literacy, with relatively poor skills in personal finance management, budgeting, and investing. Media reports speak of young people who cannot manage their finances well enough to pay off their student loans, of people plagued by credit card debt through ignorance of revolving interest rates, and of seniors who put pensions in. the insurance policy recommended by their sales agent.

Being financially literate means having the knowledge to make critical financial decisions, but the lack of financial literacy among Taiwanese continues to dominate the headlines, both when it comes to people buying insurance policies and derivatives linked to investments, investing in bitcoin and other cryptocurrencies or buying stocks in fraudulent and unlisted companies.

The “Taiwan Financial Lives” survey released on October 30 last year by the Taiwan Academy of Banking and Finance found that 37% of respondents believed they had only a “little understanding” of services and financial products, while 36% thought they “completely” did not understand. Describing their overall financial literacy, 32.2% thought theirs was “poor”, while 45.5% said theirs was “extremely poor”.

As more Taiwanese embrace the diversity of wealth management tools and products available, they are finding that leveraging their knowledge and life experience is not enough to navigate the financial industry – literacy. financial is essential.

A survey released in June last year by HSBC bank found that only 20% of Taiwanese parents believed their financial knowledge was sufficient to answer their children’s questions. More than half of Taiwanese teachers surveyed said they had never incorporated financial education into the school curriculum due to a lack of financial literacy, poorly designed finance courses, and poor experience. in teaching financial education.

The Financial Supervisory Commission announced last month that it would tighten regulations regarding relationships between bank clients and wealth managers from January 1, after incidents in which managers abused access accounts receivable and defrauded customers to meet sales targets have mushroomed over the past two years. This is the second time since 2019 that the committee has hardened its position on such relations in order to fight against fraud.

However, many people continue to blindly chase high returns without understanding the risks involved, which amounts to a lack of financial literacy. To improve the public’s financial literacy, the government should follow in the footsteps of the United States, United Kingdom, Australia and Japan, which have implemented national financial literacy strategies.

The commission urged the Taiwan Financial Services Roundtable to design courses to improve people’s financial literacy. The government and academic institutions could also cooperate at several levels, such as establishing a working group to coordinate financial education resources between ministries and to establish a financial program for elementary schools up to high schools, and even for universities.

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