Literacy and the financial sector
The research report titled ‘Financial literacy: Improving understanding, creating opportunity’ set out ten strategic recommendations, both raising awareness of financial literacy difficulties, and developing ways to overcome the barriers that these difficulties present.
What the research found
Financial literacy difficulties are a major issue in Ireland and a growing concern for adult learners and literacy programmes. Difficulties understanding everyday financial terms are not confined to any one group in society; this is an issue that affects the whole population.
The research included a telephone survey of a national sample of over 1,000 people. This revealed three important points.
• Difficulties in understanding financial terms are not confined to those from less advantaged backgrounds. Many middle class adults appear to have difficulties understanding financial terms and words.
• When asked about the term APR, more than one in three people could not select the correct definition from a choice of three. So, barriers to understanding financial services are not specific to adults with literacy and numeracy difficulties.
• Poor literacy and numeracy compound these barriers to using financial services. Using plain English to explain the services is not enough in isolation.
Further research revealed that key financial terms remain a mystery to many
Follow-up research released in 2006 revealed that 17% of respondents did not understand the term SSIA despite major coverage in the media. The research also found 28% did not understand Credit Rating and 37% did not understand Equity. Familiarity with the terms decreased in correlation with the decreasing level of education received by the respondent.
