During the global financial crisis, the question of financial security has become very important to citizens. Since February 2008, financial experts led by Alexander Ivashkin, the Director of the NGO the League of Credit Brokers have conduct public education activities to improve ‘financial literacy’ of citizens. This activity is a part of the Protect Citizen’s Economic Rights project implemented with the support of the “Our Rights” Program. The League of Credit Brokers facilitated establishing a committee that developed a set of proposals to the authorities to establish a system of financial education and to protect the economic rights of citizens. Educational seminars, meetings with representatives of financial institutions, and a brochure titled Ways to Avoid Credit Slavery have become very popular in Primoriye.  The implementer of the project has also drafted and submitted to the Vladivostok City Administration a Program to build a positive image of financial institutions in Vladivostok and to improve citizen financial literacy by 2012.

In recent years, Russia has witnessed the accelerated development of the public financial service sector. In the market of new lending and deposit products, many new services and products including electronic services have become available. For example, currently 54 lending institutions (banks), 74 insurance companies, about 30 credit cooperatives, 5 non-state pension funds, 4 managing and 20 credit-brokerage firms operate in Vladivostok. Although the demand for financial services has increased rapidly, financial institutions recently realized that without raising public awareness of financial and banking services and rules of client-institution relationships retail segments of the financial market will not develop effectively. Moreover, many people do not trust financial institutions and have little understanding of financial opportunities created by the modern financial market.

In June and July 2008, the NGO League of Credit Brokers worked with student-volunteers from the Far East Public University and Vladivostok Public University of Economics and Services to conduct a research that confirmed the financial situation described above. The survey conducted among 13,311 residents of Vladivostok showed that about 80% of residents know very little about the financial credit system. At the same time, in the past 2 years 54% of residents had taken loans from banks. Approximately 54% of the population is not very satisfied with the work of credit and financial institutions. In addition to the survey, student-volunteers conducted a study of the work practices of the banks and their affiliates based in Vladivostok. The students used a ‘Mystery Shopping’ tool - a well known approach used by market research companies to measure quality of retail service or gather specific information about products and services.  Student-volunteers visited banks acting as ordinary customers interested in obtaining loans and other services. The goal of the study was to evaluate banks or bank subsidiaries on a set of criteria that important for customers and not for the Chief of the Central Bank of the Russian Federation of the Primorsky Krai. The study showed that:

• Half of Vladivostok banks did not meet criteria important to customers;
• Local banks were most customer friendly;
• The credit and financial community of Vladivostok and Primorskiy Krai need to improve customer service.

The League of Credit Brokers has developed steps to improve financial literacy through the project Protect Citizen’s Economic Rights. On July 10, 2008, the League in cooperation with the Department of Economic Development of Primorskiy Krai organized a regional conference to discuss financial education of the population as the main element of economic protection of the rights of citizens. Over 200 participants attended the conference, among which were representatives of almost all federal institutions, Human Rights Representative Agency, Ministry of Internal Affairs, Department of Internal Affairs of the Primorsky Krai, Pension Fund of Primorsky Krai, Federal Antimonopoly Agency,  Central Bank, regional branches of Federal Financial Markets Service, and other officials as well as representatives of the non-governmental organizations interested in creating a customer friendly financial system in Primorskiy Krai. Representatives from insurance agencies, pension funds, credit cooperatives and banks also attended the conference. Vice Chairman of the Legislative Assembly of Primorsky Krai Dzhambulat Tekiev opened the meeting by delivering a welcome speech on behalf of V.V. Gorchakov, the Chairman of the Assembly of Primorsky Krai. He stated that "the 21st century has rightly been called the century of the great economy. At the same time, the level of financial illiteracy in our country is still very high. An average Russian has little understanding of issues related to mortgages, loans, and deposits. He or she does not know how to calculate tax payments. Economic illiteracy of the population hinders the development of the private sector and the economy as a whole. For the growing economic power of the state, it is above all necessary for population to be familiar with basic economic concepts. Citizens need to be skill-oriented in financial products and opportunities that are extremely popular on the modern market. In Russia, there is a need to improve the financial education of the population ...”

The Conference demonstrated that the need for financial education of the population has long been beyond the scope of competency for individual communities and represents a challenge on regional and national levels. The chairman of the NGO the League of Credit Brokers, Alexander Ivashkin was the keynote speaker at the conference. Participants received brochure on Ways to Avoid Credit Slavery developed by theLeague of Credit Brokers. 7,000 copies of the published brochure became of great demand of local population.

One of the most important outcomes of the Conference was a decision to form a committee of representatives from insurance companies, banks, financial institutions, private pension funds, brokerage firms, and other financial institutions of Primorskiy Krai. The Committee would prepare proposals and work together to develop a set of laws that protect financial interests of citizens.

The League of Credit Brokers has also drafted and submitted to the Administration of Vladivostok and the Chief Federal Inspector of the Authorized Representative of the President of the Russian Federation in the DFO (Far East Federal District) in Primorsky Krai a detailed Program to build positive image of financial institutions in Vladivostok and to improve citizen financial literacy by 2012. This program covers all segments and age groups, from schoolchildren and students up to middle-aged people and pensioners.

The Project Manager for the Protection of the Economic Rights of Citizens Project, Alexander Ivashkin:
“In general there is no system of education and financial institution image-building program addressed to residents of Vladivostok. Without this, already existing forms of community outreach for the credit and financial markets will always face difficulties in the development, and the population itself may be easy prey to financial predators. While conducting financial educational program for population, the City Administration can increase the number of investors in the city. The positive reaction of the population to the program will attract more customers. Even municipal loans can become possible. However, we need to organize a number of events that help to balance this process”.

 

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“Our Rights” Program is implemented by Management Systems International (MSI) in partnership with organizations “Initiative Plus” and “ISAR” thanks to the support of the American people through the US Agency for International Development (USAID). The content of this informational sheet is the responsibility of MSI, and the views expressed do not necessarily reflect the views of USAID or the US Government.

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Contact Data:
Natalia Volgusheva, Public Outreach Manager,
Management Systems International
Our Rights Program
18 M-Amursky Street, office 313, Khabarovsk, 680000, RUSSIA
Tel: (4212) 30-61-47, 31-66-06
nvolgusheva@our-rights.kht.ru,
www.advocacy-ru.org