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It's not just disadvantaged and vulnerable groups that struggle with financial decision-making. People who are highly educated in finance also make poor decisions - for instance, by focusing too much on growing their assets and ignoring risks. But studies show that when regulation is effective and the financial system can be trusted, even consumers with limited financial knowledge and information-processing capabilities have the potential to deal with complex financial decisions. For example, when considering mortgage protection insurance, applicants stand to benefit from knowing the actual risk of events like serious illness or injury that can affect their ability to meet monthly loan repayments.

It's pretty common nowadays to see the likes of the Reserve Bank of Australia or the Australian Bureau of Statistics issue warnings about the size of Australian household debt. The reason is that the consequences of poor financial decisions often reach far wider than an individual or family. The global financial crisis showed us how rapidly financial contagion can spread - one person's debt is another person's asset, so when the debt is written off so is the asset. However, there has been little improvement in financial literacy in the wake of the financial crisis, the lack of which was one of the underlying causes.