From avoidance to evidence: Britain should take the financial literacy test
We all know an education bore who says at parties: “I would be a lawyer/accountant/doctor/engineer/etc but I just couldn’t be bothered to take the test.”
We don’t believe them, so why should we believe a country that says, “We invented modern finance, but please don’t check our homework.”
The Organisation for Economic Co-operation and Development (OECD) is often referred to as a “club of rich countries”. To help the world get richer, in 2000 the OECD created The Programme for International Student Assessment (PISA) – a worldwide study measuring 15-year-old school pupils’ performance on mathematics, science, and reading. The UK has learned much from participating.
Since 2012 PISA has been testing financial literacy, but the UK has not participated in those four rounds. Obviously you can’t manage what you refuse to measure. The UK loves evidence-based policy right up until the evidence might be awkward.
If we’re serious about productivity, inclusion, and growth, we should probably know whether people understand interest rates beyond “they’ve gone up and I’m cross.”
Encouragingly, the Government published its Financial Inclusion Strategy on 5 November. Included within it is a commitment to “exploring options such as participating in the OECD PISA 2029 Financial Literacy Assessment, which could provide a robust, internationally comparable benchmark on the financial capability of young people in England”. This is to be applauded, and followed through.
Financial literacy is critical to society, not just personal responsibility. When households don’t grasp compound interest, inflation, or risk, they don’t just make bad decisions — they amplify systemic ones. Mispriced mortgages, under-saved retirements, crypto-influencer disasters: these eventually arrive at the Treasury like an unpaid bar tab. The OECD financial literacy test isn’t just a school exam; it’s a stress test for society.
London markets itself as a global financial centre, a fintech hub, and a thought leader in financial regulation. Opting out of international benchmarking while simultaneously exporting financial services is like claiming Michelin-star status but refusing to let anyone see the kitchen. Even France would find that sauce a bit rich.
Yes, the results might be embarrassing — which is precisely the point. If the UK scores poorly, that’s not national humiliation: it’s actionable intelligence. Pretending everyone understands pensions because we once bought Premium Bonds is not a strategy. The OECD test gives UK policymakers something rarer than optimism: a baseline.
City PM and City Pay It Forward launched their YearSixDividend initiative to deliver free, high-quality financial education to every Year Six child in the capital. This initiative would give pupils in London five years of preparation ahead of any PISA financial literacy test.
In the end, PISA tests are about ‘appropriate reliance’ – trust, if you will.
Financial systems only work when people believe they’re navigable rather than a rigged casino. Testing literacy is a way to signal that the government accepts some responsibility for whether the rules are intelligible to normal humans, not just to those who studied Philosophy, Politics and Economics and still can’t explain Annual Percentage Rates (APRs) at dinner.
UK exceptionalism is not a substitute for competence, and sovereignty does not magically confer numeracy. Participating in the OECD financial literacy tests won’t solve Britain’s financial struggles, but it will give us the baseline to ensure our population is gaining the skills to solve them. Refusing to participate strongly suggests we already know the answer — and don’t like it. Let’s encourage our participation.