than going to the dentist.<sup>40</sup> In Russia, the findings of the Financial Literacy Survey (see Box 2) were used to develop recommendations for both the financial education and consumer protection programs in Russia.

**Box 2: Financial Literacy Survey in Russia**

In June 2008, the World Bank conducted a financial literacy survey as part of the Financial Literacy Program in Russia. The survey consisted of 40 questions, covering consumer understanding of financial calculations, spending habits and confidence in financial institutions. Over a two-week period, more than 1,600 households in forty regions were canvassed and the survey results were confirmed in discussions with four focus groups.

The survey found that about half the population views its levels of financial literacy as unsatisfactory. This low level of literacy was confirmed by a simple quiz of six questions on basic issues needed to manage household finances. Only 19 percent of respondents gave at least five correct answers to the six questions. About 25 percent could not provide more than one correct answer. Compounding the problem is weak trust in the Russian financial sector. Of the consumers who do not save, nine percent gave the reason as "lack of trust in financial institutions." Only 11 percent of households have insurance policies, whereas 21 percent of consumers consider that they need life insurance policies, but do not buy them because they "do not believe that the insurance companies will pay the claims in case of their death." Russian consumers also have little confidence that problems with financial transactions can be easily and fairly solved. Three quarters (77 percent) give a 50:50 chance (or worse) that disputes with financial institutions "will be resolved quickly and justly." Over 80 percent receive financial information from newspapers, magazines and specialized TV shows. However, when making a financial decision, 51 percent turn first to the advice of family and friends and 36 percent look to "consultants". Households would generally like to receive financial education. Three-quarters of respondents said that they would like training on how to protect themselves financially from fraud and how to plan their financial future. One third (31 percent) wants to learn what laws protect financial consumers and what procedures should be followed when consumers feel that their rights have been violated. Over ten percent (13 percent) would like information about credits for household consumption and another 16 percent want to learn about credits to finance purchase a house or apartment. However about one-quarter of respondents expressed no interest in financial training on any topic.

_Source_ : World Bank, _Russian Federation: Diagnostic Review of Consumer Protection in Financial Services_ , 2009

**Follow-up surveys of financial literacy should be conducted every three to five years.** The follow-up surveys will help identify if programs of financial education and consumer protection are working—and if they are not effective, what needs to be done.

**Regular financial literacy surveys may also provide food for thought in ways of improving financial consumer protection.** For example, the US 2008 Jump$tart College Survey showed that most who graduate from a four-year college have a viable degree of financial literacy, regardless of the focus of their university studies or even specific classes in financial education. However this group encompasses just over 25 percent of the US population. The three-quarters of the population who do not complete a college education tend to not be financially literate—and tend to have little interest in becoming financially literate.<sup>41</sup> It is this group that most needs consumer protection in the form of mandates and/or “plain vanilla” products vetted by financial regulators before they are offered to the public. Products

> 40 OECD, _Improving Financial Literacy - Analysis of Issues and Policies_ , 2005 41

> President’s Advisory Council on Financial Literacy, _2008 Annual Report to the President_

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