The importance of adequate consumer protection and financial literacy for the long-term stability of the financial sector has been highlighted by the recent turmoil in financial markets worldwide. This Working Paper presents a set of Good Practices for Consumer Protection and Financial Literacy developed by the World Bank's Europe and Central Asia Region, using international experience as a guide. The Good Practices provide a practical tool for systematic analysis of laws, regulations and institutions involved in consumer protection and financial literacy—and allow detailed cross-country comparisons.
The Good Practices are based on four key concepts:
- consumer disclosure should be simple, easy to understand and comparable
- abusive business practices by financial service providers should be prohibited
- consumers should have an easy, inexpensive and speedy method of resolving disputes with financial institutions
- financial education should be available to consumers so that they can understand financial services and products and make informed decisions.
The Good Practices were developed as part of a pilot program in consumer protection and financial literacy, which has prepared Diagnostic Reviews in ten countries of Europe and Central Asia since 2005.