The last financial crisis has highlighted the need to strengthen consumer protection for financial products and services, and many regulatory and other initiatives have been taken since then. The European Commission, as well as the three authorities created under the European System of Financial Supervision (ESFS), i.e. the EBA, ESMA and EIOPA, give high priority to this issue and important tasks in the field of consumer protection and financial education have been assigned to these authorities.
In recent years, numerous regulatory texts, including the Consumer Code, have considerably extended the CSSF’s missions and powers in the field of consumer protection. Its role and powers are very broad and include financial education, handling complaints from clients of supervised entities, representation in international bodies, adaptation of applicable regulations and even the prohibition of certain products.
Further, the Law of 23 December 2016 on credit agreements for consumers relating to residential immovable property requires measures to encourage consumer education. It states in particular that: “The CSSF shall promote measures that support the education of consumers in relation to responsible borrowing and debt management, in particular in relation to mortgage credit agreements. It shall encourage the dissemination of clear and general information on the credit granting process in order to guide consumers, especially those who sign a mortgage credit agreement for the first time.”
Financial Consumer Protection Committee (PCF Committee)
The subject of financial consumer protection concerns various business sectors. Consequently, the CSSF brought together the main players concerned in order to discuss the various approaches and, where appropriate, to coordinate future actions. Thus, the PCF Committee was created in February 2012. The CSSF chairs this committee composed of delegates of various authorities, institutions and associations active in the field of consumer protection or financial education.
The purpose of the PCF Committee is not to interfere with the work of the various represented players but to exchange information, to identify areas for improvement, to coordinate certain initiatives or even to carry out joint projects. The aim is to establish a dialogue to achieve concrete results (adaptation of regulatory texts, improvement of the published information, achievement of joint projects in the field of financial education, etc.).
The members of the PCF Committee were unanimous in saying that priority should be given to improving financial education in Luxembourg, as an appropriate financial education is the best consumer protection. Given the number of ministries, authorities and organisations involved in financial consumer protection and financial education issues, it is important that the initiatives taken by the various actors are coordinated at the level of the PCF Committee.
National financial education strategy and CSSF mandate
As part of its work, the PCF Committee has developed a national strategy for financial education. This strategy targets the entire population. It not only gives an overview of existing financial education initiatives in Luxembourg, but also lists project and proposals to be implemented for the different target groups. The objectives are to develop financial knowledge of consumers, to promote responsible financial behaviour and to prepare young people, as early as possible, for the increasingly complex economic environment. Thus, one of the objectives is to integrate financial education into school curricula. The aim is that each student leaves Luxembourg education understanding the basic elements of economic life so as to manage his/her income and expenses and to make the right decisions regarding his/her financial commitments. According to the national strategy, the understanding of basic financial concepts such as the inflation mechanism or the management of the national budget should be included in financial education. All efforts in financial education should ensure that everyone has the basic knowledge of the financial world and can manage his/her money and related financial risks effectively and responsibly.
The national strategy elaborated by the PCF Committee was approved by the Minister of Finance on 17 July 2017. On this occasion, the latter gave the CSSF a mandate to develop and coordinate activities in the field of financial education in Luxembourg.
lëtzfin: national financial education initiative
As part of its consumer protection mission, the CSSF launched in November 2019 the first digital tools to promote financial education in Luxembourg: a new information portal www.letzfin.lu, as well as applications to raise awareness among people of all ages of everyday financial issues.
Information portal "lëtzfin"
The information portal www.letzfin.lu contains essential information on financial topics you have to deal with in your private and professional life: “money”, “insurance”, “credits”, “saving and investing”, “pension”, “precautions to be taken” and “over-indebtedness”. Its purpose is to educate and protect you by giving you basic financial information to help you analyse and understand your financial situation so as to make appropriate and informed choices.
The portal also offers: credit calculation simulator, budget management tool, quiz games and explanatory videos.
The information portal lëtzfin forms the backbone of all initiatives launched as part of this national strategy.
FinGoL: The Financial Game of Life
The Financial Game of Life (FinGoL) is a dynamic educational game in the form of a “chatbot” developed by students at the Luxembourg Tech School.
FinGoL is aimed at a young audience and simulates, in a fun way, an adult’s financial life as well as the situations s/he faces in real life. During the game, players will have to find a job, manage their budget, make different financial choices and assume their consequences. They will learn why it is important to maintain a budget, what is credit and what are the risks when getting easy credit. If the players manage their money responsibly, they will access higher levels and unlock other features.
lëtzfin budget: a budget management application for adults
In order to prevent financial difficulties that may lead to over-indebtedness it is important to keep track of your financial situation. The risk of over-indebtedness is significantly reduced if you have a clear view of your income and expenses.
The application allows you to establish and manage your budget, identify unnecessary expenses and plan your future financial situation. It is available in two languages (French and German).
lëtzfin Pocket Money: a budget management application for young people
The basic concept of the application was developed by a team of four young volunteers and awarded at the Lux4Good Hackathon. The application aims to make young people aware of the importance to manage their personal finances. Parents are actively involved in this process.
The application allows young people to better track their use of pocket money or other income. Parents assume the role of bank and guide their children in managing their personal budgets. Dialogue between parents and children is key to the learning process and to help break taboos on money issues. The smartphones of young people and their parents is linked through a QR code. The parents can only view the global financial situation of their children but not the detailed data.
Through this application, young people actively learn to manage their personal budget and better appreciate the value of money.
Different surveys relating to financial education in Luxembourg were published.
Standard & Poor’s Global Financial Literacy Survey
In 2015, Standard & Poor’s Rating Services carried out a survey “S&P Global FinLit Survey” which is the most comprehensive global gauge of financial literacy to date. The survey assessed knowledge of four basic financial concepts: risk diversification, inflation, numeracy and interest compounding. The survey is based on interviews with more than 150,000 adults in more than 140 countries. It allows ranking countries according to the level of financial literacy of their residents. According to Standard & Poor’s, only 53% of Luxembourg’s population are financially literate and has basic knowledge of financial education: So a large part of the population does not have the necessary knowledge to effectively manage its own finances. It is clear that Luxembourg will have to make efforts in this area. Detailed results per country and socio-demographic criteria are available in the document “Full Data Set”.
Banque centrale du Luxembourg (BCL)
The BCL published working papers about stress testing household balance sheets in Luxembourg and household debt burden and financial vulnerability in Luxembourg and a survey about the level of financial literacy in Luxembourg.