- Financial consumer protection is an increasing priority for policymakers around the world, as its own policy objective and as a contributing factor to the healthy development of the financial sector, financial inclusion, and broader economic growth.
- Since the first edition of the Good Practices, international guidance on policy approaches to financial consumer protection has substantially increased and regulatory techniques have advanced rapidly.
- The widespread uptake of digital financial services has also heightened risks for consumers and raised new policy concerns.
- This 2017 edition of the Good Practices updates and expands upon the previous edition, synthesizing new guidance and techniques and covering emerging issues such as digital finance and effective supervisory techniques.
- The purpose of the Good Practices is to serve as a practical, comprehensive reference and assessment tool to assist regulators in enhancing and implementing financial consumer protection regulatory and supervisory frameworks.
Overview and Purpose of the Good Practices for Financial Consumer Protection
A strong consumer protection regime is key to ensuring that expanded access to financial services benefits consumers, enabling them to make well-informed decisions on how best to use financial services, building trust in the formal financial sector, and contributing to healthy and competitive financial markets.
To increase its practical utility to policymakers, the 2017 edition of the Good Practices comprehensively updates and expands upon the previous edition (published in 2012). The 2017 Good Practices incorporates new approaches, research, and international guidance on financial consumer protection. It expands on priority areas, including supervisory techniques, effective disclosure, and fair business practices. Emerging issues such as those related to digital channels, innovative products and business models, and new types of providers of financial services have been included. Finally, the Good Practices includes greater detail on policy considerations for effective implementation of regulatory approaches, a key challenge in many countries.
The Good Practices is designed as both a comprehensive reference and an assessment tool for country-level policymakers and regulators. It is intended to serve as a practical, helpful collection of good practices in financial consumer protection, drawing from successful practices seen around the world and consolidating, complementing, and expanding upon high-level international principles and guidelines.
Scope and Structure of the 2017 Good Practices for Financial Consumer Protection
The 2017 Good Practices follows a functional structure, with chapters on the following types of products and services:
- Chapter 1: Deposit and Credit Products and Services
- Chapter 2: Insurance
- Chapter 3: Private Pensions
- Chapter 4: Securities
- Annex A: Retail Payment Services
- Annex B: Credit Reporting Systems
- Annex C: Financial Capability
Each chapter lays out good practices in the following areas:
- Legal and supervisory framework: legal framework, institutional arrangements and mandates, supervisory activities, enforcement, etc.
- Disclosure and transparency: format and manner of disclosure, disclosure of terms and conditions, key facts statements, etc.
- Fair treatment and business conduct: unfair terms and conditions, unfair practices, product suitability, sales practices, agents, compensation, etc.
- Data protection and privacy: lawful collection and usage of customer data, confidentiality and security of customer information, sharing customer information, etc.
- Dispute resolution mechanisms: internal complaints handling, out-of-court formal dispute resolution mechanisms, etc.
Each good practice describes the key elements that policymakers and regulators should consider acting upon, such as the elements to ensure effective disclosure of terms and conditions, or the requirements necessary to ensure that remuneration policies encourage responsible conduct and minimize conflicts of interest. Each good practice is accompanied by detailed explanatory notes that expand on its intent and purpose and provide practical guidance and country examples of implementation, including considerations for trade-offs, proportionality, and compliance costs.