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The Board of the International Organization of Securities Commissions today published the Core Competencies Framework on Financial Literacy to assist members, investor education providers and other stakeholders in their efforts to develop and implement investor education initiatives.
The Framework provides guidance to users on the content of investor education programs and indicates which areas could be assessed as part of an evaluation strategy.
The objective of the Framework is to better prepare investors to navigate an increasingly complex investing environment. It seeks to equip investors with core competencies that enable them to make informed decisions about how to diversify investments, reduce risk or choose suitable investments, among other things. The Framework also describes the knowledge, attitudes and behaviors that retail investors should attain for each core competency to enhance their financial literacy.
The Core Competencies Framework builds on and complements the OECD/INFE Core Competencies Framework on Financial Literacy for Adults and the IOSCO Strategic Framework for Investor Education and Financial Literacy. It encourages users to build investors’ competences based on the following seven areas:
- Basic investing principles and concepts: the broad underlying principles of investing.
- Investment product attributes: key features such as product structure and fees as well as the potential risks of various investment products.
- Buying/selling process of investment products: the competencies applicable during the process of selecting investment products, financial service providers and platforms for buying and selling investment products.
- Owning investment holdings: the competencies applicable to monitoring and managing investments.
- Investor rights and responsibilities: investor rights and responsibilities and investor protection measures such as complaint and redress procedures.
- Behavioural biases related to investing: the emotional or cognitive biases that may affect investors when making investment decisions.
- Investment scams and frauds: the common features of investment scams and the ability to avoid being a victim of scams and frauds.
Finally, the Framework provides illustrative examples of selected competencies, which are intended to be general and universally applicable.
To prepare the framework, IOSCO drew on the results of a survey it distributed among members of its Committee on Retail Investors and the OECD International Network on Financial Education.
