2022.12 The Taiwan Banker NO.156 / By Ingrid Chang
Legislator Lin Chu-yin: Financial education is urgently required for young peopleBanker's Digest
Seeing that other countries are working hard on financial literacy for young people, Lin Chu-yin, a legislator on the Finance Committee of the Legislative Yuan who has long been concerned about youth issues, also attaches great importance to the financial life of Generation Z. She campaigns for more attention to financial literacy among the young generation. Lin said that she herself belongs to Generation X, and is more familiar with information sources like TV, radio programs, newspapers, and print media. Most of these sources are controlled by central administrators, such as National Communications Commission (NCC), etc. If fake experts sell financial products on TV, they will be reported. Traditional media are more conservative in their requirements for professional knowledge. Investment fraud is ubiquitous Gen Z is the “digital native” generation. They often hang out online, so most of them learn things that sound correct, but the online information environment is chaotic. Internet celebrities flaunt freedom of wealth, while selling financial products in the background. They have no professional certifications or expertise, but they teach their audiences about financial management, using their rhetorical skills to reach young people and cause them to misunderstand these investments. According to statistics from the Criminal Police Bureau of the National Police Agency, there were 4,902 cases of investment fraud in Taiwan in 2021, an annual increase of 71.95% compared to 2,852 in 2020. This can be attributed to the rapid rise of the Taiwan stock market that year. According to the fraud prevention call identification app Whoscall, investment-related calls or text messages accounted for over 60% of total fraud. Recently, reports indicated that online celebrities set up a LINE group called “Taiwan Stock Warriors,” recommending individual stocks, and guiding members to remit money, arousing attention from the Financial Supervisory Commission (FSC). Others also used Instagram to solicit brokerage business. The FSC said that if verified, this violates the Investment Trust and Investment Advisory Law, and the penalty is up to 5 years of imprisonment, or fines of NT$ 1 million to 50 million. Lin said that the FSC should strengthen its checks to prevent young people from listening to one-sided pitches. In addition, Google also announced new measures to combat online fraud in Taiwan. Financial advertisers must obtain prior authorization from the FSC. According to reports, this policy not only applies to Google search, but also includes the subsidiary YouTube and Google multimedia advertising. Buy now, pay later and excessive credit In addition, Lin mentioned that Generations X and Y had witnessed a “credit card debt tsunami.” At that time, banks competed vociferously in order to snatch credit card customers. The “George & Mary” card targeted young people. Later, vicious competition for credit and debit cards facilitated further borrowing. Even vegetable markets and night markets had card booths. Card applicants got gifts without any spending. Students with no income could easily own several cards. Due to over-expansion of credit, nearly one million people fell into card repayment traps. Banks also faced pressure from bad debts, seriously affecting their operations and health. In response, the FSC adopted eight major measures. First, it restricted credit expansion. Personal credit could not exceed 22 times borrowers’ monthly salaries. These credit checks eliminated roadside card applications and reduced circulating balance by nearly 80%. Now, Gen Z is familiar with electronic payments. Non-cash payment methods are just digits on phones. Gen X, in contrast, mostly uses cash and has a sense of spending money. Recently, some financial platforms allow people to “buy now, pay later.” These lenders don’t ask their customers for credit information, allowing customers to spend excessively. Businesses operating in the grey areas of the law should be brought within the scope of regulation. Lin has also questioned the issue of Shopee Late Pay in the Legislative Yuan. Lin believes that young people do not want their lives to be overwhelmed by financial pressure. The most important thing for Gen Z is to establish financial literacy. First, in school, “we learn mathematical formulas, but we don’t learn much about financial management.” Young people lack a concept of their personal balance sheet, how much they may earn, and how much they can spend, so jumping straight into investment and financial management can be dangerous. Therefore, Lin called on banks and financial training institutes to continue to invest in financial literacy for the younger generation. She also observed that many financial holding companies have begun to launch integrated apps with convenient built-in functions. For example, apps can set low points for currency exchange when traveling abroad; young investors can use the app to buy stocks online at any time. She feels that financial institutions should display warnings when shifting from physical financial institutions to the internet. Only by understanding customers’ risk tolerance and by teaching Gen Z about finance can they make long-term, stable investments and realize their dreams.