Report Details Bureau’s Efforts to Improve Financial Literacy of Consumers
WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau unveiled its financial education strategy in its first annual Financial Literacy Report to Congress. The report details the Bureau’s three-pronged approach to improving financial literacy opportunities for consumers: education initiatives, evidence-based research, and outreach to consumers and financial education stakeholders.
“The best and most immediate form of consumer protection is self-protection,” said CFPB Director Richard Cordray. “We want to see empowered consumers making responsible and informed financial decisions. Today’s report chronicles our many efforts already underway to achieve that goal through our financial education strategy.”
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that, within two years of its creation, the Bureau deliver a report to Congress on the Bureau’s activities and strategy to improve the financial literacy of consumers. Today’s report covers the time period from July 21, 2011, when the Bureau opened its doors, through June 15, 2013.
Broadly, the Bureau’s strategy is to motivate and support consumers in taking positive action on financial decisions that serve their own life goals. The Bureau seeks to provide consumers with relevant information, tools, or other support when they are most open to learning about financial decision-making. The Bureau is targeting its direct-to-consumer educational tools and resources towards assisting consumers with the financial aspects of large life decisions, such as going to college, retiring, or buying a home. The Bureau is also targeting consumers making smaller decisions that can have large life consequences, such as starting a habit of savings, managing debt, and passing along financial life skills to the next generation.
The Bureau’s strategy uses a three-pronged approach:
- Education initiatives to reach consumers at key moments: The Bureau’s website has many tools available to help consumers in financial decision-making and has special sections for servicemembers, students, older Americans, and parents. The Bureau is also developing financial education initiatives with schools, workplaces, faith communities, community organizations, government agencies, and other groups that offer other means to reach consumers at key moments in their financial lives. The Bureau’s resources include:
- Ask CFPB: An interactive online tool that gives consumers answers to almost 1,000 questions about financial products and services, including credit cards, mortgages, student loans, bank accounts, credit reports, payday loans, and debt collection.
- Paying for College: A suite of online tools for students and families evaluating their higher education financing options when comparing college costs, shopping for financial aid, and assessing repayment options.
- Consumer Complaint Database: An online database of consumer complaints that the public can use to inform decision-making about financial products and services.
- CFPB en Español: A CFPB website that was released in May 2013 and that makes CFPB resources available in Spanish.
- Evidence-based research to identify what works: The Bureau is conducting evidence-based research to build on current knowledge of what approaches to financial education are effective and how best to measure effectiveness. The Bureau will use the results of this research to inform its financial education work, and will also share the results widely with other government agencies, financial education practitioners, and other stakeholders. The current research projects focus on:
- Determining how to measure financial well-being and identifying the knowledge, skills, and habits associated with financially capable consumers.
- Evaluating the effectiveness of existing approaches to improving financial decision-making and outcomes.
- Developing new approaches to financial education and evaluating their potential to improve financial well-being.
- Outreach to share information and develop approaches to reach consumers: The Bureau engages in dialogue with consumers to understand their needs. The Bureau also uses outreach to build a stakeholder network for sharing best practices and information, and to develop relationships with organizations that can reach and help consumers. These organizations include financial education providers, federal, state, and local government agencies, financial service providers, and various other types of private and non-profit organizations. For example:
- Servicemembers: The Bureau’s Office of Servicemember Affairs conducted 112 outreach events delivering consumer financial education information to more than 33,380 military and veteran consumers during the report’s time frame.
- Older Americans: The Office for Older Americans has held or participated in more than 200 events, which have been attended by more than 7,900 people. These events help the CFPB learn what efforts have been underway to strengthen the financial literacy of older consumers and help inform stakeholders on the Bureau’s work in this arena.
- Financial Education: The Office of Financial Education conducted more than 300 meetings with stakeholders to gain insight into the financial education needs of consumers and to find out what the Bureau can do to help them better address those needs. These meetings also laid the groundwork for collaborations.
- Financial Empowerment: The Office of Financial Empowerment held a national convening, in addition to listening sessions, webinars and other meetings with local, state, and national entities to better understand the challenges facing low-income and economically vulnerable consumers and in order to develop collaborative initiatives.
The Bureau will continue to focus on a financial education strategy that enables consumers to make informed financial decisions throughout their lives.