including the APR and APY, and a list of all fees. These laws also establish that institutions regulated by the SFC must provide their clients clear and timely financial information allowing them to be adequately aware about their rights and obligations with the regulated financial institutions, and enough information for them to be able to compare costs among products. Particularly, Law 1748 of 2014 mandates that financial institutions inform their clients in addition to the interest rate paid or received by them, the Unified Total Value for all items, actually paid or received by the client in all their products and in advance to the conclusion of the contract, but this law is not currently enforced.

Additionally, Law 1328 and Law 1480 established that financial institutions must provide financial education to their clients. Decree 457 of 2014 which was drafted by the Inter-Sectorial Commission for Economic and Financial Education, in charge of designing and implementing the National Strategy for Economic and Financial Education, states that consumer protection is one of the main objectives.

One issue hindering the effectiveness of financial disclosure is the low level of financial capabilities among Colombians. According to the PISA 2012 results, Colombia occupied the last position (out of 17 countries) on financial literacy. This low level of financial capabilities may impact financial decisions. People unaware of the consequences of their financial behavior are more prone to making bad decisions. In fact, a 2012 World Bank study found that just one-third of those surveyed could calculate a simple interest rate, and that 69 percent of the surveyed population stated they were never taught how to manage their money. A survey conducted by the CAF in 2014 showed that only 12% of the people surveyed managed the concept of compounded interest rates, only 36% mentioned to have a financial plan for their lifetime, and 67% reported to have had economic difficulties in the near past. Similarly, in a survey conducted by Banca de las Oportunidades and the Financial Superintendence of Colombia in 2015, only 62% of the people surveyed mentioned they knew the different costs associated to their financial products.<sup>8</sup> From a policy perspective, mistakes in financial decision-making due to limited information would be less of a concern if all financial products offered were relatively cheap. However, the cost of financial products varies drastically depending on whether certain product fees are incurred (World Bank, 2008). While according to Asobancaria the costs of financial products in Colombia remain average for the region, the perception of consumers is that these costs are high.

Many of the respondents of the survey conducted by Banca de las Oportunidades and the Financial Superintendence of Colombia in 2015 had a negative perception of the financial system. In particular, the main two reasons for not saving using financial products are the high costs associated with the ownership of a savings account (34%) and the perception that the products offered by the system are inadequate for their needs (22%).

> 8 However, the results of our study suggest that probably this self-reported percentage is overrated.

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