At the initiative of its Relationship, Citizenship and Conduct Supervision Department, and embracing the understanding that Financial Education is an important public good to benefit both financial institutions and their users and clients, the Brazilian Central Bank (“Central Bank”) approved, on September 12, Statement No. 34,201 (“Statement”).
The Statement aims to guide the market in the direction of efforts and the achievement of positive results arising from Financial Education actions carried out by financial institutions and other institutions authorized to operate by the monetary authority.
The Central Bank clarifies that Financial Education, as it successfully advances by means of educational actions carried out by market agents, fulfills the role of an important vector of solidity of the financial system, giving rise to efficiency in providing services and offering products.
In addition, the conscious inclusion of the user in the range of offerings in this market – as already identified and highlighted by the OECD in its guidelines for private agents and NGOs dedicated to Financial Education1 – is critical for the development of learning experiences regarding financial issues and appropriate use of certain products and services, including (in this case referring to the criteria of purpose and adequacy) conscious access to the use of credit.
The new measure goes hand in hand with the recent rules enacted by the National Monetary Council (“CMN”), having the objective to increasingly strengthen Financial Citizenship, reducing the asymmetry of information between counterparties, improving transparency and supporting clients and users in their financial decision-making process.
Considering that financial institutions are inherently relevant to the development of healthy financial habits across the spectrum of the market, with their penetration, their ability to communicate on a large scale and their knowledge about the characteristics of their clients (a product of appropriate relationship dynamics, in accordance with CMN Resolution 4,539), the Statement aims to involve and engage institutions in the Financial Education process, whose practical results are expected to allow better management of financial resources by users and clients, with the formation of savings funds and making investments, through organization and planning of personal and family budgets.
With the intention, therefore, of guiding the market towards efforts and the achievement of increasingly positive results for the benefit of the entire community that uses financial products and services (banking process), the Statement communicates four basic principles that should be the guidelines for the execution of Financial Education actions by institutions:
- CREATION OF VALUE FOR THE CLIENT: to make available relevant actions and useful information for the financial life of clients, as well as the granting of incentives;
- INCREASE IN REACH AND DEPTH: to efficiently reach the public consumers of the financial products and services, with a view to ensuring their universal access to such actions and information;
- OPTIMIZATION AND PERSONALISATION OF PRODUCTS AND SERVICES: to provide channels that have the most appropriate content, language and timing for the implementation of the actions, taking into account the profile and needs of each client, as well as the degree of complexity and risk exposure which the financial products and services offered are capable of generating;
- EVALUATION AND ENHANCEMENT OF ACTIONS: maintain a system for measuring the effectiveness that the actions implemented are capable of generating in view of their purpose, with the aim of improving the approach used to each interaction with the consuming public.
The Central Bank will monitor the implementation and results obtained from such actions, and it will be authorized to adopt additional measures to meet the objectives set forth in the Statement.
Demarest’s Banking and Finance team is available to assist clients in connection with any aspect related to this topic, as well as the implementation of Financial Education actions by institutions authorized to operate by the Central Bank.