Beijing Workshop Promotes Financial Consumer Protection in China

Do you use any kind of financial products, such as a bank card?

Do you know how to make a formal complaint when you are not satisfied with the financial services you receive?

Do you feel your rights as a financial consumer are well-protected?

Worldwide, 150 million new consumers join the financial market each year. How to better protect financial consumers has become an important issue for all countries.

To share international best practices in financial consumer protection as well as discussing how to establish a legal framework of it in China, a workshop on “Financial Consumer Protection: Best Practices and Legal Framework” was held in Beijing on January 28, 2013.

The workshop, attended by over 90 officials and professionals from China’s major financial institutions, was co-organized by the People’s Bank of China (PBC) and the World Bank, as part of the Bank’s support to China in protecting the interest of financial consumers, promoting financial access and competition, and maintaining a healthy financial market.

Global financial crisis in 2008 demonstrated that weak consumer protection poses significant risk to wider economy, said Wang Huaqing, PBC’s Commissioner of Discipline Inspection as he opened the workshop. “The need to protect financial consumers has become a common understanding and international trend,” he said.

The Chinese government attaches great importance to this and has, since 2011, established a department specializing in financial consumer protection in PBC, the China Banking Regulatory Commission (CBRC), the China Insurance Regulatory Commission (CIRC) and the China Securities Regulatory Commission (CSRC) respectively.

According to the official website of PBC, as of the end of November 2012, its branches set up 822 financial consumer advocacy centers around the country and received 11,717 complaints and appeals, of which 10,499 were settled.

 “There is a strong link between protecting consumers from abusive products and practices, and safety and soundness of financial system,” said Nagavalli Annamalai, a lead counsel at the World Bank. Consumer confidence and trust promotes financial stability, growth, efficiency and innovation in the financial system over the long term, she stressed.

James Callon, former Commissioner of Financial Consumer Agency of Canada (FCAC), shared FCAC’s experience – for example, how it established early credibility by practicing full transparency with the industry, uncovering major issues of systemic non-compliance and providing quality service to the public.  

As a result, in the first five years of operation, over $120 million dollars was refunded to consumers due to compliance actions; errors in millions of mortgage documents were found and corrected; major market campaigns with misleading disclosure on rates were challenged.

Jiao Jinpu, Director General, Financial Consumer Protection Department of the PBC, said that PBC launched pilot projects in financial consumer protection in 2010 and has since made progress in financial consumer education, established and improved mechanisms for settling complaints and appeals, and carried out special activities in personal information protection by commercial banks and prevention of and crackdown on bank-card related crimes.

These pilots will close in 2013 and then a set of formal mechanisms will roll out, he said.  

“In financial consumer protection, the World Bank has much experience in both research and on-the-ground practices. We hope that our two sides could strengthen cooperation in wider areas in the future,” Wang Huaqing said.