Zagreb, May 5, 2010 – Each year, 150 million new consumers worldwide take on financial responsibilities—some assuming more debt than they could afford and others not fully informed about their options or financial obligations, according to a World Bank report released today. The same applies to Croatia where household debt increased from 25 to 40 percent between 2003 and 2008, with rapid rise in residential mortgages denominated in Swiss Francs and other foreign currencies.
Croatia: Diagnostic Review of Consumer Protection and Financial Literacy reviews and compares financial services consumer protection in Croatia with international good practices. Prepared by the World Bank in partnership with the Government of Croatia, the report offers various options to ensure financial services are delivered in ways that empower the customer—with more information and more recourse for grievances.
These recommendations were presented today at a workshop opened by the State Secretary of the Ministry of Finance of the Republic of Croatia Zdravko Marić and the World Bank Country Director for Central Europe and the Baltic Countries Peter Harrold.
“At its heart, the need for consumer protection arises from an imbalance of power, information and resources between consumers and their financial service providers, placing consumers at a disadvantage,” said Peter Harrold, World Bank Country Director for Central Europe and the Baltic Countries. “A well designed program to strengthen consumer protection and financial literacy can help reduce these imbalances and help consumers to make sound financial decisions.”
“As Consumer protection and financial literacy represent dynamic areas which are constantly being developed and improved, through a continuous monitoring of policies in consumer protection in the European Union and the implementation of the new guidelines into the Croatian legal framework, Croatia will continue to contribute to increasing the level of consumer protection and financial literacy in line with European standards.” said Zdravko Marić, State Secretary of the Ministry of Finance of the Republic of Croatia.
The report concludes that in Croatia, the quality of consumer protection in financial services has overall improved in recent years. To address the challenges that still remain the review recommends four actions for Croatia:
- Offer clear and simple financial consumer information;
- Strengthen market conduct practices of financial institutions;
- Enhance handling of financial consumer complaints and disputes;
- Introduce a nation-wide financial education program.
Since joining the World Bank in 1993, Croatia has benefited from financial and technical assistance, policy advice, and analytical services provided by the global development institution. To date, the World Bank has approved 46 loans to Croatia amounting to around US$3 billion, and approved 51 grants for Croatia with a total value of US$71 million.