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Action 7 - Empowering citizens through financial literacy

Progress so far on action 7 of the capital markets union 2020 action plan.


Action 7 is part of objective 2 (Make the EU an even safer place for individuals to save and invest long-term) of the 2020 capital markets union (CMU) action plan. This action aims to empower citizens through financial literacy.

What is financial literacy?

Financial literacy means the knowledge and skills needed to make important financial decisions. Every day, thousands of people are deciding where to open a bank account, which mortgage to choose, where to invest their money and how to save for retirement.

However, according to the OECD/INFE 2020 international survey of adult financial literacy, about half of the EU adult population does not have a good enough understanding of basic financial concepts. While the overall figures are low, the problem is more acute in some parts of society than others, with the most vulnerable disproportionally affected. Low-income groups, for instance, as well as women, young people and older people, tend to score lower than the rest of the population when it comes to financial knowledge.

Everyone should be able to understand the risks involved when borrowing or investing money. Financial literacy can help individuals plan for the future, make better decisions about what to do with their money, and invest in capital markets in a way that meets their needs. This will be even more important for individuals and businesses as the economy gradually recovers from the COVID crisis.

Financial literacy also protects individuals from over-indebtedness, excessive risk-taking, fraud, or cyber risks. Financial education complements consumer protection, but does not replace it.

Financial competence framework

In the 2020 CMU action plan the Commission committed to conducting by Q2 2021 a feasibility assessment on the development of a financial competence framework in the EU. A report published in April 2021 presented the results of the feasibility assessment and the way forward, which consisted in working with the OECD’s International Network on Financial Education on joint EU/OECD financial competence frameworks for adults and youth.

The joint work between Commission services and the OECD on the financial competence frameworks was kicked off in April 2021 with an official launch event in presence of H.M. Queen Máxima of the Netherlands, European Commissioner Mairead McGuinness, and OECD’s Deputy Secretary-General Masamichi Kono.

In January 2022, the joint EU/OECD-INFE financial competence framework for adults was officially published. The framework was developed in close collaboration with representatives of the Member States. The framework builds upon the existing G20/OECD INFE core competencies framework on financial literacy for adults and adapts it to the EU context. The framework integrates digital finance and sustainable finance competences as well as competences relevant for financial resilience.

The new financial competence framework for adults (FinComp for adults) outlines key areas of competences pertaining to personal finance (e.g. planning a budget, investing, borrowing or preparing for retirement). The framework covers the knowledge/awareness, skills/behaviours and confidence/attitudes/motivation that individuals need to support their financial well-being throughout their lives.

FinComp for adults is made available to national public authorities and private bodies for their voluntary uptake in policies and educational tools. The new framework can be used by national public authorities and stakeholders to inform the development of financial literacy policies and programmes in the EU, design learning materials and educational tools, identify gaps in the provision of financial education, and create tools to assess and monitor financial literacy levels.

An online event took place on 25 January to launch the financial competence framework for adults. The panel focused on how the framework can be used in concrete policies and initiatives (watch it here).

The Commission services and the OECD have now started disseminating the joint EU/OECD-INFE financial competence framework for adults and facilitating its uptake amongst Member States and stakeholders, including through targeted exchanges. The objective is to support the use of the framework in concrete policies, tools and educational materials, and to offer a platform for policy makers and stakeholders to exchange good practices and lessons learnt when taking up the framework.

Measuring financial literacy

In order to improve financial literacy in the EU it is indispensable to have a tool that can measure levels of financial literacy. Currently there is no tool that measures the levels of financial literacy across all EU Member States, so the European Commission committed to publishing a Eurobarometer survey that evaluates the levels of financial literacy across the EU.

The Eurobarometer survey was published in June 2023 and showed that overall levels of financial literacy in the EU are low. However, there was wide differences across Member States and the results also pointed to the need for financial education to target in particular women, younger people, people with lower income and those with lower level of general education who tend to be on average less financially literate than other groups.

Extension of the principle enshrined in Article 6 of the Mortgage Credit Directive to relevant sectoral legislation

In the 2020 CMU action plan, the European Commission committed to assess the appropriateness of extending the principle enshrined in Article 6 of the Mortgage Credit Directive to relevant sectoral legislation, the objective being to promote learning measures that support the financial education of consumers, in particular in the context of retail investment.

As part of the retail investment strategy presented in May, the European Commission included, in the Markets in Financial Instruments Directive II (MiFID II) and the Insurance Distribution Directive (IDD), a requirement to promote national measures that can support citizens' financial literacy, regardless of their age, and social and educational background.

What are the next steps?

In addition to the work on the dissemination and uptake of the financial competence framework for adults, the Commission services and the OECD will publish a financial competence framework for children and teenagers in September 2023. A launch event will be held on 2 October 2023 in Brussels.


Back to the list of actions under the 2020 CMU action plan