IOSCO report aims to encourage investor education, financial literacy

The report identifies practices currently used by members of IOSCO’s Committee on Retail Investors — which was established last year and is chaired by Howard Wetston, chair and CEO of the Ontario Securities Commission (OSC) — to address the challenge of improving investor education and financial literacy. It aims to help guide other regulators in developing and enhancing their own investor education and financial literacy programs.

“Investor education and financial literacy is a shared responsibility — for investors, industry and regulators alike. This international committee is essential in pulling together and considering, at a global level, the best thinking and research by our members in the field of financial literacy,” said Wetston. “Today, we have published a new strategic framework, which will guide our efforts in establishing investor education initiatives that are impactful, substantive and ultimately empower investors.”

IOSCO stresses that the need for investor education and financial literacy “has never been greater than today. As the financial marketplace continues to evolve and innovate, investment products are becoming increasingly complex and financial services increasingly diverse. Greater understanding of key financial concepts is required on the part of retail investors to understand and evaluate the choices available to them and to avoid financial fraud.”

It also notes that these efforts are essential given that the responsibility for saving and investing for retirement is increasingly shifting from employers to individuals in many countries.

These challenges led to the creation of the Committee on Retail Investors in June 2013 to carry out IOSCO’s policy work on retail investor education and financial literacy, and to advise the IOSCO board on emerging retail investor protection issues.

Comments on the paper are due by July 31.