ACCA (the Association of Chartered Certified Accountants) is urging more countries, including the UK, to join the OECD PISA assessment of financial literacy to avoid getting left behind. Despite the Coalition's commitment to financial education in schools; introducing it to the curriculum from September it opted not to take part in the first OECD PISA assessment.
The study found that most of pupils' performance in financial literacy can be explained by their performance in mathematics and reading, while a lot of the rest appears to be explained by their families' wealth, social status and access to financial services and banking accounts, as well as pupils' own experience of managing money. Unsurprisingly those at the bottom are most at risk, creating a perpetual problem.
Sarah Hathaway, Head of ACCA UK, said:
"A lack of financial literacy leads to a lack of social mobility. But the importance of an overarching financial literacy strategy is also clear from the OECD findings.
"While the overall performance of the education system tends to be the best predictor of financial literacy among pupils, pupils in some countries (notably Australia, New Zealand, the Czech Republic and Russia) were much more financially literate than one would expect, given their performance in mathematics and reading."
Manos Schizas, senior economic analyst at ACCA, said:
"What all of these countries share are robust financial literacy strategies, with some countries developing their strategies pre-crisis in 2006 and implementing them by 2007 or 2008, and others developing very rigorous strategies post-crisis in 2010-11 and catching up quickly.
"The other thing all of these outperforming countries have in common is that an above OECD-average share of pupils (typically more than a third) have access to financial education at school, and receive at least a few hours per year of financial education as a separate subject.
"Whilst the government has recognised the importance of 'enterprise education', the focus of the recent Lord Young report; it seems to overlook the importance of long-term national financial literacy strategies that integrates with the education system. Similarly, the first UK financial literacy strategy identified young people as a priority group, but unfortunately never targeted entrepreneurs, which we think was as omission."
ACCA's recent report Financial education for entrepreneurs – what next? illustrates the opportunity cost of not combining enterprise and financial education.
Manos Schizas said: "Whilst a new national strategy for financial literacy is expected this summer it is very unfortunate that this cannot be informed by the PISA assessment – and another opportunity of its kind will not come along for another three years."