Financial Literacy Project
The Safeguarding the Financial Wellbeing of Australians by Improving Financial Literacy Project is an initiative of the Centre for Corporate Law and Securities Regulation at Melbourne Law School. Through empirical research undertaken by the research team the project contributes to a broader understanding of the role of financial literacy and consumer behaviour in Australia, and its relationship with Australia's financial services and consumer protection laws.
Type of Grant
Australian Research Council Discovery Grant
Australian Research Council Discovery Grant
The project will contribute to a broader understanding of the role of financial literacy and consumer behaviour in Australia, and its relationship with Australia's financial services and consumer protection laws. The project aims are consistent with contributing to the Australian Financial Literacy Strategy goals of ‘increasing economic participation and social inclusion, driving competition and market efficiency in the financial services sector, and potentially reducing regulatory intervention.’ The project is the first in-depth study of the relationship between financial literacy and Australia’s financial services and consumer protection laws.
Australian consumers of financial products need to make sound financial decisions for their economic security, including retirement planning and to provide for their families. Optimal financial choice increases with higher levels of financial literacy. Australian financial literacy studies find that certain demographic groups have lower levels of financial literacy, including young Australians. In response to this finding, in 2012 the research team conducted a survey with 200 Victorian government secondary school students to assess financial literacy competencies, understanding of financial products and services and attitudes about money. The research team also conducted focus group interviews with 70 secondary school students to learn about young people's attitudes to money, financial independence, their consumer rights and their thoughts about financial literacy education. The project aims to enhance understanding of the factors that contribute to financial literacy, which can inform the innovation of financial literacy programs in schools.
The project will also evaluate the key areas of complexity and vulnerability for Australian consumers in relation to the financial products available to them. Specific research, including an empirical study, has focused on new national laws regulating small amount loans and consumer lease contracts and the role of these laws in advancing consumer protection. Behavioural economics identifies the cognitive biases and sociological factors that impact on financial decision making. The project team has published a Research Report on the factors identified in international and Australian surveys that contribute to sub-optimal financial decision making. The Report provides the foundation for research on specific financial products, consumer behaviour and regulation through consumer protection laws.
Ian Ramsay is the Harold Ford Professor of Commercial Law at Melbourne Law School, University of Melbourne, where he is Director of the Centre for Corporate Law and Securities Regulation. He has practised law with firms in New York and Sydney. He is a member of the Commonwealth Government's Corporations and Markets Advisory Committee, the Companies Auditors and Liquidators Disciplinary Board, the Australian Securities and Investments Commission External Advisory Panel and the Corporations Law Committee of the Law Council of Australia. Former positions Professor Ramsay has held include Dean, Melbourne Law School, University of Melbourne, Head of the Federal Government inquiry on auditor independence, member of the Takeovers Panel, member of the Audit Quality Review Board, member of the Law Committee of the Australian Institute of Company Directors, member of the International Federation of Accountants taskforce on rebuilding confidence in financial reporting, consultant to the Parliament of Australia House of Representatives Standing Committee on Economics, Finance and Public Administration, Visiting Professor at the University of Paris, The University of Toronto and The University of Hong Kong. Professor Ramsay has published extensively on corporate law and corporate governance issues both internationally and in Australia.
Dr Paul Ali is an Associate Professor in the Faculty of Law at The University of Melbourne, Australia. Paul has published widely on banking and finance law, corporate governance and institutional investment law, securitisation law, and structured finance law. Paul's most recent publications include books on credit derivatives, insider trading and synthetic securitisation. Paul teaches banking and finance law, and is the Editor of the Company and Securities Law Journal and Section Editor (Banking & Finance) of the Australian Business Law Review.
- A Capuano and I Ramsay, 'What Causes Suboptimal Financial Behaviour? An Exploration of Financial Literacy, Social Influences and Behavioural Economics' (Research Report, Financial Literacy Project, Melbourne Law School, The University of Melbourne, March 2011)
- P Ali, C McRae and I Ramsay, ‘Consumer Credit Reform and Behavioural Economics: Regulating Australia’s Credit Card Industry’ (2012) 40 Australian Business Law Review 126-133
- P Ali, C McRae, I Ramsay and TJ Saw, ‘Consumer Leases and Consumer Protection: Regulatory Arbitrage and Consumer Harm’ (2013) 41 Australian Business Law Review 240-269
- P Ali, C McRae and I Ramsay, ‘The Politics of Payday Lending Regulation in Australia’ (2013) 41 Monash University Law Review 411-451
- P Ali, C McRae and I Ramsay, 'Financial Literacy and Financial Decision-Making of Australian Secondary School Students'(2014) 42 Australian Business Law Review 228-233
- P Ali, M Anderson, C McRae and I Ramsay, ‘The Financial Literacy of Young Australians: An Empirical Study and Implications for Consumer Protection and ASIC’s National Financial Literacy Strategy’ (2014) 32 Company and Securities Law Journal 334-352
- P Ali, M Anderson, C McRae and I Ramsay, 'Consumer Rights Awareness of Young Australians' (2014) 22 Competition and Consumer Law Journal 126-150
- P Ali, I Ramsay and C Read, 'Behavioural Law and Economics: Regulatory Reform of Consumer Credit and Consumer Financial Service' (2014) 43 Common Law World Review 298-343
- P Ali, C McRae and I Ramsay, 'Payday Lending Regulation and Borrower Vulnerability in the United Kingdom and Australia' (2015) Journal of Business Law 223-255
- P Ali, L O’Brien and I Ramsay, ‘A Quick Fix? Credit Repair in Australia’ (2015) 43 Australian Business Law Review 179-205
- P Ali, M Anderson, C McRae and I Ramsay, “The Financial Literacy of Young People: Socioeconomic Status, Language Background and the Rural-Urban Chasm” forthcoming in (2016) 26 Australian and International Journal of Rural Education
The research team was invited to submit the summary results of the project for the Australian Securities and Investments Commission National Financial Literacy Strategy Review and Consultation Paper 'Shaping a National Financial Literacy Strategy for 2014-16.'The research team contributed this submission in August 2013.
Further information about the Financial Literacy Strategy Review is available here.
The research team has a research partnership with the Consumer Action Law Centre in Melbourne relating to the research project on the regulation of consumer lease contracts.
Links and Resources
Australian Financial Literacy Resources
Australia's Financial Literacy Strategy was launched in 2008. The Strategy Report, key resources and information about government and partner initiatives are available from the Financial Literacy Website.
The Australian Financial Literacy Strategy is coordinated by the Australian Securities & Investments Commission (ASIC). The Money Smart website is the online home of the Financial Literacy Strategy. It contains a range of key resources, publications and budget tools.
September 1-7 is National Money Smart Week. MoneySmart Week is an independent, not-for-profit national initiative promoting the importance of financial literacy. MoneySmart Week is a national initiative set up in 2012 by members of the Australian Government Financial Literacy Board. Further information is available on the Financial Literacy website.
International Financial Literacy Resources
The Organisation for Economic Cooperation and Development (OECD) International Network on Financial Education coordinates the OECD financial literacy and education program. More information is available on the OECD website.
The World Bank Financial Literacy and Consumer Protection website has a number of key resources and publications about the World Bank's activities and research on financial literacy. More information is available on the World Bank website.
Australian Financial Literacy Surveys and Reports
Financial Literacy surveys are essential to understand the current financial literacy capabilities of individuals. The Financial Literacy Project's research report contains a comprehensive overview of Australian and international financial literacy studies in the context of behavioural economics. The following links are a selection of the most recent Australian financial literacy studies.
- National Australia Bank and Centre for Social Impact, Measuring Financial Exclusion in Australia, 2013
- National Australia Bank and Centre for Social Impact, Measuring Financial Exclusion in Australia, 2012
- National Australia Bank and Centre for Social Impact, Measuring Financial Exclusion in Australia, 2011