LETTER | Lack of financial literacy - a critical concern

LETTER | The Federation of Malaysian Consumers Associations (Fomca) fully supports Bank Negara Malaysia’s concern that that is a lack of financial literacy among Malaysian consumers.

More than 290,000 consumers have been declared bankrupt with more than 70 percent of them below the age of 45. Indeed, data from various sources indicate clearly that many Malaysians are not managing their finances optimally.

Bank Negara would suggest four reasons why Malaysians get into financial difficulties. The reasons are low financial resilience and thus vulnerability to financial shocks, the tendency for instant gratification, no long-term financial planning, and a lack of understanding of risks and returns making consumers vulnerable to scams and fraud.

Secondly, the number of scams in Malaysia is increasing substantially. According to the inspector-general of police, there have been a total of 12,092 online scams between January and July 2022 with losses amounting to RM 414.8 million.

Several agencies including the police, Bank Negara, and the Securities Commission have been taking various measures to strengthen safeguards against financial frauds and scams. However, the number of scams keeps increasing.

The missing link to strengthening financial resilience and responsible financial management could be the financial empowerment of consumers.

In Malaysia, we have the National Strategy for Financial Literacy 2019-2023 whose primary objective is to elevate the financial literacy of Malaysians and promote responsible financial behaviour in consumers.

The strategy is expected to be achieved through the Financial Education Network (FEN), an inter-agency platform committed to promoting financial literacy among Malaysians.

Fomca strongly believes more needs to be done to empower Malaysian consumers through financial literacy programmes.

While there is indeed some very useful financial education content on the FEN website, there is a need to actively reach out to consumers in the field to educate and empower them to enable responsible financial management and protection against scams.

We need an active reach-out policy. We cannot wait for consumers to access the website to educate themselves.

Some suggestions that Fomca would like to make are:

• Developing an adequate financial literacy programme for pre-schoolers;

• Relooking and reforming primary and secondary school content on financial education;

• Extensive promotions of financial literacy programmes at Institutions of Higher Learning;

• Financial Literacy programmes through key non-profits such as trade unions, youth organisations, and women organisations;

• Community-based financial literacy programmes;

• Financial literacy programmes for young workers in the public and corporate sectors;

• Financial literacy programmes for workers in the gig economy;

• Strengthening financial literacy curriculum at teacher training colleges.

Further, it is crucial that current financial literacy programmes are evaluated critically in terms of achieving the behaviour change that is intended for responsible financial management and protection against scams.

Lack of financial literacy is a critical issue in Malaysia affecting the financial wellbeing as well as the overall well-being of Malaysian consumers.

It is time to actively seek to bring financial literacy education to the workers and consumers in the field to promote responsible financial management and protect consumers from online and financial scams.

PAUL SELVA RAJ is the secretary-general of the Federation of Malaysian Consumers Associations (Fomca).

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.