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FEATURE STORY January 31, 2018

New Resources and Benchmarking on Financial Consumer Protection and Financial Inclusion


January 25, 2017 – Financial inclusion and financial consumer protection are complementary: a strong consumer protection regime is key to achieving financial inclusion in a responsible and sustainable manner that benefits consumers.

As new consumers enter into the formal financial sector, they need to be able to make informed choices and be protected from harmful business practices.

Establishing robust financial consumer protection frameworks is critical to reaching Universal Financial Access 2020 and beyond.

Financial sector authorities are tackling how to address new risks to consumers, particularly those arising from new digital channels for delivery of financial products and services. They’re also developing new approaches, incorporating behavioral insights into the design of effective disclosure regimes, developing rules regarding product suitability, and building up specialized market conduct supervisory tools.

Two new complementary World Bank reports provide the a comprehensive collection of good practices and benchmarking for financial consumer protection and financial inclusion around the world.

The 2017 edition of the Good Practices for Financial Consumer Protection highlights what good practices exist in the world, while the 2017 Global Financial Inclusion and Consumer Protection (FICP) Survey tracks the enabling environment reforms pursued by financial sector authorities in recent years.

The Good Practices for Financial Consumer Protection (“Good Practices”) is a reference and assessment tool to help financial sector authorities enhance and implement financial consumer protection regulatory and supervisory frameworks.

International guidance on policy approaches to financial consumer protection has substantially increased and regulatory techniques have advanced rapidly in the last couple of years. At the same time, the widespread uptake of digital financial services has heightened risks for consumers and raised new policy concerns.

This 2017 edition of the Good Practices expands upon the previous edition, covering emerging issues such as digital finance and effective supervisory techniques and combining good practices with country examples, research, and implementation considerations. 

While the Good Practices is a reference for financial sector authorities, the 2017 Global FICP Survey assesses progress to date. The 2017 Global FICP Survey tracks the prevalence of key policy, legal, regulatory, and supervisory efforts to advance financial inclusion and financial consumer protection.

Financial sector authorities in 124 jurisdictions – representing 141 economies and more than 90 percent of the world’s unbanked population – responded to the Survey, which covered a range of topics related to national financial inclusion strategies, nonbank e-money issuers, agent-based delivery models, legal and institutional frameworks for financial consumer protection, disclosure and transparency, dispute resolution, and financial capability.

Tracking the scope and nature of these reforms allows financial sector authorities to benchmark themselves against peer economies.

The Survey results show that financial sector authorities continue to prioritize financial inclusion. Thirty-four jurisdictions report having a national financial inclusion strategy (NFIS) in place, and 29 jurisdictions report such a strategy to be under development.

Many financial sector authorities are also encouraging the entry of digital financial service providers to increase competition and consumer choice, and leverage new technologies.

Seventy-three jurisdictions report having a regulatory framework in place for nonbank e-money issuers, including over 70% of jurisdictions in Sub-Saharan Africa and East Asia & the Pacific.

Sixty-three percent of these jurisdictions report that mobile network operators have entered the market as nonbank e-money issuers.

Finally, the Global FICP Survey shows that financial sector authorities are taking various approaches to strengthening consumer protections. There is evidence that these efforts are increasing: Seventeen jurisdictions report having established a specialized unit for financial consumer protection within the relevant authority since 2013.

One common regulatory approach is to require financial service providers to give customers a Key Facts Statement (a simple, comparable summary of product features and costs) when they are shopping for a financial product. Survey results show that 81 jurisdictions – including Peru, Rwanda, and the Philippines - report some requirements are in place for financial service providers to give consumers a Key Facts Statement.