WASHINGTON, D.C. —The Consumer Financial Protection Bureau (CFPB) presented its first annual financial literacy report to Congress Thursday July 18, detailing the bureau’s three-pronged approach to improving financial literacy among consumers.
The report, which covers the time period from the launch of the bureau on July 25, 2011, to June 15, 2013, covers the CFPB’s education initiatives, research on how to measure the effectiveness of financial literacy programs, and a plan to start a dialogue with consumers about their financial needs.
“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 bureau’s education initiatives, as detailed in the report, include online tools, as wells as financial education curriculum. The curriculum, developed in partnership with the Federal Deposit Insurance Corporation (FDIC), is a module in the FDIC’s Money Smart financial education program and is targeted at older adults. The bureau’s interactive online tool, Ask CFPB, gives consumers answer to nearly 1,000 questions related to credit cards, mortgages, student loans, bank accounts, credit reports, payday loans and debt collection.
The bureau has also launched a consumer complaint database and a Spanish version of its website.
“The CFPB’s financial education agenda is focused on providing consumers with tools and information to develop practical skills and support sound financial decision-making,” said Cordray in the report. “These include tailored approaches to address financial decision-making circumstances for specific populations, including: servicemembers and veterans; students and young adults; older Americans; and low-income and economically vulnerable Americans.”
To measure the effectiveness of these tools, the CFPB is pursuing a research agenda to help inform its financial education work. This includes a quantitative evaluation of two existing financial coaching programs, the results of which are expected in 2015, as well as a research project to develop measures of financial well-being for working age and older American consumers. The Office of Financial Empowerment is conducting a three-phase research, evaluation, and pilot project to determine whether the financial capability of low-income consumers can be enhanced through bundled financial products or integration of financial coaching and counseling into the offering of financial products.
On the flip side, the CFPB is building a stakeholder network for sharing best practices and information to help consumers. One section of the report highlights the CFPB’s outreach efforts, including webinars, listening sessions and meetings with stakeholders.
The report is a requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which states that the bureau must deliver a report to Congress in its activities and strategy to improve the financial literacy of consumers within two years of its creation.
“All Americans, regardless of income and level of educational attainment, need to be able to evaluate the choices available to them in the financial marketplace and understand the implications of their financial decisions in order to build secure financial futures,” the report concluded.
To read the full report, click here.