Canadians are participating in the financial markets in greater numbers and are increasingly reliant on financial markets for financial security. The financial markets are complex and, on the whole, Canadians are not financially literate. This is the fault of the educational system as financial literacy is not a priority of the school system.
Canadians have relied on the financial industry to advise them and on securities regulators to protect them when things go wrong. They have been disappointed. There have been numerous financial scandals in recent years where investors have lost untold $ millions.
Instead of intervening to protect investors, the response of Canadian regulators to highly publicized cases of investor abuse is to dedicate resources to investor education and financial literacy programs for adults. Investor education programs tend to shift responsibility (and blame) from financially sophisticated market participants who manufacture and sell financial products (and those who regulate such market participants) to a financially illiterate consumer.
Canadian governments should work together to develop and implement a national financial literacy strategy. The Foundation recommends the following action plan:
- Financial literacy should be mandatory in all Canadian high schools so that the next generation of Canadians enters the work force and financial system with a basic level of financial literacy.
- Government (including securities regulators and educators) should test the effectiveness of existing adult financial literary initiatives and not simply assume their effectiveness.
- Securities regulators need to shift responsibility from consumers back to financially sophisticated market participants who manufacture and sell financial products.
