Regulator reviews school financial literacy programs

School banking programs are programs where a bank has a relationship with a school to offer deposit products to their students.

These students are encouraged to establish bank accounts and make ongoing deposits into those accounts at the school.

The scope of the review will include:

• understanding how these programs are implemented and how they are marketed to school communities;
• considering how students are engaging with these programs and the accounts established through these programs while they are at school and after they leave school; and
• assessing the benefits as well as the risks of school banking programs, and will set out principles for appropriate conduct and good practice in this area.

Noting that financial literacy education is embedded in the Australian Curriculum (and teachers draw on a range of materials and programs to support an understanding of money and financial concepts), ASIC emphasised that it was “essential that young people develop the knowledge and the skills they need to engage effectively with financial products and services”.

ASIC deputy chair Peter Kell commented: “Transparency around school banking programs is important.  

“ASIC wants to understand the motivations and behaviours around school banking programs to ensure they ultimately serve the interests of young Australians, and to enable school communities to have an understanding of the potential impact of these programs.”

ASIC will consult with various stakeholders including those from the education sector, consumer organisations, other regulatory agencies as well as the banks offering the programs.

Financial literacy in the spotlight

Improving financial capability and literacy has been a key focus for the government this year. It launched a nationwide initiative designed to improve the financial capabilities of Australians in August.

The federal government also announced in the 2018–19 budget that it would be providing $10 million for initiatives that “develop women’s financial capability” and put “women in control of their financial lives” as part of a $50 million fund to promote the financial capabilities of Australian consumers.

There have been increasing concerns raised from those in the broking industry about the lack of accountability placed at the consumer’s feet when it comes to borrowing money. These include suggestions that there has been “overkill” in terms of the level of scrutiny and regulation that is being brought in around lending, and that the increasingly “impractical” nature of bank credit decisions.

Many brokers already offer financial literacy programs to their clients and local communities, with one broker, Mhairi MacLeod (founder and principal of Astute Ability Group), partnering with the Mortgage and Finance Association of Australia (MFAA) earlier this year to roll out a broker-led financial literacy program.

Since Ms MacLeod launched the School Entrepeneurs Program, fronted by Richmond AFL player Alex Rance, more than 80 schools, youth and community groups in Western Australia have adopted the program.

The founder and principal of Astute Ability Finance Group was honoured this week at the annual Finsure Group conference at Queenstown in New Zealand, receiving the managing director’s award for her contribution to not only the finance broking industry but also the wider community, with her School Entrepreneurs Program particularly commended.

Finsure group co-founder and managing director John Kolenda commented: “I’m thrilled we have been able to give this award to Mhairi, who has not only been a highly successful business owner but has devoted so much of her time to the community through the School Entrepreneurs Program and being an advocate for corporate social responsibility.

“Mhairi has also been a key member of the Women in Finsure committee and has been keenly promoting women in the broking industry. Mhairi is a wonderful example to the broking sector as someone who is not only a very successful business owner but is always available to help people.”

Ms MacLeod said that she was thrilled to be acknowledged by Finsure, adding: “It’s also very encouraging that the achievements of the School Entrepreneurs Program continue to be acknowledged by the industry and it’s tremendous to receive the support we have from Finsure.

“Thousands of young Australians have benefitted from taking part in the program and acquiring knowledge and skills which will make them more self-sufficient and better prepared for adulthood.”

[Related: WA schools adopt broker-led financial literacy program]