The process by which financial consumers/investors improve their understanding of financial products, concepts and risks and, through information, instruction and/or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being. - OECD
People’s ability to understand finance thereby allowing them to make informed and effective decisions through their understanding of finances. It encompasses participation by people in economic life that maximises life opportunities and enables them to lead fulfilling lives
People’s knowledge and skills to understand their own financial circumstances, along with the motivation to take action. Financially capable consumers plan ahead, find and use information, know when to seek advice and can understand and act on this advice, leading to greater participation in the financial services market”. Financial capability is a broader concept than financial literacy.
The Financial Sector Code was gazetted as a sector code in terms of the Broad-Based Black Economic Empowerment Act, of 2003 on 26 November 2012. The origins of the Code are the Financial Sector Charter, a voluntary transformation charter implemented through the Financial Sector Charter Council. It came into effect in January 2004 as a result of agreements reached at the NEDLAC Financial Sector Summit in August 2002.
The Financial Sector Code provides for all financial services firms to apply 0.30% in 2013 and 0.40% in 2014 of their net profit after tax from retail business to consumer financial education.