protecting new and vulnerable clients as financial inclusion proceeds
TRANSCRIPT
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Protecting New and Vulnerable Clients
as Financial Inclusion Proceeds
Financial Inclusion 2020 Client Protection Working Group
September 2013
CreditReporting
FinancialCapability Client
Protection
Addressing Customer
Needs
Technology-EnabledBusinessModels
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bout the FI2020 Roadmap Working Groups
Whatwillittaketoachieveastateoffullfinancialinclusion?In2011,theCenterforFinancialInclusionaskedthis
questioninaglobalsurvey,andover300practitionersgavetheirperspectivesonthekeyopportunitiesand
obstaclestofinancialinclusion .
Basedontheresponses,theCenteridentifiedfivepriorityfocusareasthatarekeytoachievingfinancialinclusion,
whichhavebeenusedasthebasisforabroadconsultativeprocesstowardaRoadmaptoFullFinancialInclusion.
Overthecourseof2012and2013,thisprocessengageddozensofexpertsandindustryparticipantsindeveloping
anaction-orientedblueprintforreachingnewandunderservedmarkets.Thefivefocusareasare:
AddressingCustomerNeeds ,chairedbytheConsultativeGrouptoAssistthePoor(CGAP),focusesondeepeningourunderstandingofclientneedsandtranslatingthatknowledgeintopracticewhile
expandingtherangeoffinancialservicesavailabletounderservedmarkets.
Technology,chairedbyVisa,analyzesthepotentialofnewtechnology-intensivechannelstoreachnewcustomers,loweroperatingcosts,increasesecurity,anddiversifyfinancialproductsavailabletolow-incomeclients.
FinancialCapability,chairedbyCiti,focusesonempoweringclientstoknowtheirrightsasconsumers,andhavetheskills,attitudes,aspirationsandconfidencetoexercisethoserights.
ClientProtection,chairedbytheSmartCampaign,outlinesstepstodeepentheimplementationofclientprotectionmeasuresforthebenefitofconsumersandstabilityofmarkets.
CreditReporting,chairedbytheInternationalFinanceCorporation(IFC),promotesextendingcreditreportingsystemsinordertoexpandaccessfornewclientswhilemanagingriskforfinancialinstitutions.
Eachofthefiveworkinggroupshascraftedaroadmapthatasks:Whatisthevisionforthistopic?Whatstandsin
thewayofachievingthevisionandwherearethegreatestopportunities?Whataretheenablingactionsand
correspondingactorswhocanadvancethevision?
The Main IdeaWith an enormousinflux ofinexperienced andvulnerablecustomers at stake,attention toconsumerprotection is needednow more than ever
before. We canbuild on the strongconsensus aboutthe principles offinancial consumerprotection.
Theresponsibility toprotectconsumers isshared byfinancial serviceproviders,regulators andconsumers
themselves.
Providers shouldmake clientprotection a part ofthe core identity ofthe bankingprofession. Providersneed to be proactivein applying sharedstandards and
policing their ownindustry.
Consumers will notbe effectivelyprotected withouteffective regulation.Yet, in manycountries, clientprotectionregulation isnascent or weak.
There is an urgentneed for majorinvestments ineffective clientprotection systemswithin the decade.
A promisingopportunityexists toempowercustomers toprotectthemselves,through financialcapability
building,consumerorganizationsand means suchas publication ofcomplaints data.
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responsibilities).Whatfollowsinthissectionisabriefdescriptionoftheactionsandstatusofthese
threegroupswhenthevisionforclientprotectionisrealized.
1.ProvidersActResponsiblyThecoreofclientprotectionisthebehaviorofprovidersintheirproductofferingsandinteractionwith
clients.Underfullinclusionwithclientprotection,allprovidersoffinancialservicestothepoor(both
mainstreamandalternative)implementawidelyacceptedsetoffinancialclientprotectionprinciples.2
TheyapproachclientsasifguidedbyaHippocraticOathtodonoharmandactasfollows:
Provideproductsthataresafe,understandableandrelevantfortheclients.(Forexample,theyguardagainstover-indebtedness.)
Priceservicesresponsiblytobeaffordablewhilesustainingtheprovider. Incentivizepersonnelinalignmentwithpreventingover-indebtednessandtreatingclients
ethicallyandrespectfully.
Communicateclearlywithallclients,regardlessofdisabilityorspecialcharacteristics,andprovidefullinformationtoallowforinformeddecisions.
Installsecuritytopreventidentitytheftandmisuseofdata. Followprudentstandardstosafeguardclientssavings. Offeraccessibleandresponsivecomplaintresolutionprocesses. Useclientinteractionstoreinforcetheirfinancialcapability. Maintainaccesstoafinancialinfrastructurethatsupportsclientprotection(i.e.,creditbureaus,
paymentsystemsanddepositinsurancesystems).
Inthisvisionofinclusionwithclientprotection,generalprinciplesaretranslatedintopracticeinthe
formofrecognizedstandards.Suchstandardsarethoroughlyintegratedintotheoperationsof
providers.Commitmenttoclientprotectionisembeddedamongallpersonnel,fromboardmembersto
frontlinestaff.
Providersalsocontributetoclientprotectionbyactingcollectively.Industrybodiesandinvestorgroups
establish,promoteandmonitornorms,standardsandcodesofconduct.Theyworkconstructivelywith
regulatorstoapportionresponsibilityforupholdingstandards.
2.RegulatoryEnvironmentCoversAllProvidersandIsEffective
Acompetitivemarketbringsbenefitstoclientsintheformofimprovementofproductsandservices,as
wellascompetitivepressureforlowerprices.Accordingly,competitionfurtherstheoverallaimof
consumerprotectiontobenefitclients.Weenvisionthatspecificclientprotectioneffortswillbesetina
generalmarketframeworkthatpromotescompetition.Atthesametime,overlyburdensomeregulation
canencourageshadowbankingwhileunregulatedcompetitioncantriggerclientprotectionproblems.
2SeeAnnex1foracross-listingofclientprotectionprinciplesarticulatedbyvariousparties.
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Enlightenedmarketregulatorswillseekabalancethatallowscompetitionamongallfirmsgovernedin
anorderlymanner.Inouridealvision:
Supervisorshavethepoliticalsupporttoimplementandenforceregulationsafterfirstconsultingwithindustryandconsumersonwhatisreasonableanduseful. Allprovidersoffinancialservices,whetherprudentlyregulatedornot,arecovered. Regulatorsmaketheirbesteffortstomonitorandmitigateabusebyfraudstersandpromoters
ofpyramidsandotherillegalschemes,inlightofthewidespreadrisks.
Regulatorsalsoaddressabusebythirdparties(e.g.,caregiversorguardians),aswellasfraudsters,inlightofthewidespreadvulnerabilityofcertainpopulationsegmentstosuchrisks.
Regulationisproportionatetothesetting,natureandextentofproblemsobservedinthemarket,andthecapacitiesofbothregulatorsandserviceproviders.Regulationisnotoverly
restrictive,usescommonsenseanddoesnotimposeanunduefinancialburdenonproviders.
Regulationisinformedbydialoguewithprovidersandclients,whileavoidingcapturebyindustryinterests.
Regulatorshavethemeanstocatchandcontrolrogueplayerstomaintainconfidenceinthefinancialsystem.Theyalsoaddressabusebythirdparties(e.g.,caregivers,guardians)aswellas
fraudsters,inlightofthewidespreadvulnerabilitybycertainpopulationsegmentstosuchrisks.
Regulatorsensurethatrecourse,disputeanddebtresolutionmechanismsareavailabletoclients,beyondthoseofferedbyindividualproviders.
Well-designeddepositand/orinsuranceguaranteeschemesprotectsmalldepositorsandpolicyholderswhilekeepinginstitutionsresponsiblefortheiractions.Well-functioningcreditreporting
mechanismsexist.
3.ClientsHaveRightsaswellasMeanstoProtectThemselves
Effectiveclientprotectionrequiresthatclientshavesomedegreeoffinancialcapability.Inthisvision,
clients:
Understandenoughabouttheuseoffinancialproductsandservicestobeabletomakeinformedchoices.Theyknowwheretogettheinformationtomakesuchchoices.
Understandtheirrightsandresponsibilitiesasconsumersandwheretoturniftheyencounterproblems.
Thesefinancialcapabilitiesexistatabasiclevelevenamongthemostvulnerableclientgroups,suchasthosewithlowliteracy,theverypoor,andthedisabledordependent.
Toprotectthegainstheyhavemade,clientshavedevelopedwaystoraisetheirvoicestoprotecttheirinterestsinthemarketplace,makingclientprotectiondemand-driven.
Atthesametime,informationneededtoprotectclientsisfreelyavailablethroughmultiplechannels.Thereiswidespreadunderstandingofandsupportforclientprotectionamongthe
generalpublic,opinionleadersandmedia.
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The current regulatory environment
is often designed to protect youth,
for example through age of majority
rules. However, such rules can be a
barrier to youth access. Accordingly,extending current protection regimes
may in fact consolidate rules that
exclude youth and instead, a more
nuanced view should be considered.
Timothy Nourse, President, Making
Cents International
III.CurrentSituation
Atpresent,thisvisionisnotarealityinanycountry,althoughprogresshasbeenacceleratingaroundthe
world.Thissectionnotessomeofthemostimportantbarrierstoclientprotectionforeachofthethree
majoractors.
1. ProvidersDoNotAlwaysActResponsiblyInmostways,providersbenefitwhentheirclientsbenefit,especiallyinthelongerterm.However,the
alignmentofinterestsisimperfect.Somepoorpracticesmayprovideacompetitiveadvantage,
especiallyintheshortterm(e.g.,provisionoftoo-largeloans,non-transparentpricing,orhigh-pressure
salestactics),andsomeenvironmentsareinsufficientlycompetitive.
Providersdisplayawiderangeofattitudesaboutprotectingclients.Therearesociallymotivated
providerswhowilltakeactiononcetheybecomeawareofproblems,andthereareenlightenedproviderswhotakealong-termviewregardingclientrelationshipsandtheirreputation.Attheother
extremearefast-buckprovidersandoutrightfraudsters.Mostprovidersaresomewhereinthemiddle
andwillbehaveaccordingtotheincentivesandrulestheyface.Inpractice,fewprovidersprioritize
clientprotectionprinciplesintheabsenceofregulation.
Theperceptionthatconsumerprotectionsonlyaddcostsanddetractfromrevenuesmaydiscourage
providersfromembracingclientprotection.Providersoftenseeclientprotectionasaregulatory
responsibility,whichpromotesacompliance-basedresponse(i.e.,fulfilltheletterofthelaw,andresist
morestringentregulation).Providersmayalsodisplaycomplacencyabouttheirclientprotection
practices.
Manyproviderstoclientsatthebaseofthepyramidsimplydonotknowhowtoimplementclient
protectionprinciples.Thisspeakstotheabsenceinmanycontextsofexplicitnormsandstandards,as
wellastoweaknessesorcompetingprioritiesamongindustry-supportingbodies.
Vulnerablegroupssuchasyouth,theelderlyandpersonswithdisabilitiesaremoreexposedtotherisk
offinancialabusesfromfamily,friends,guardians,
caregiversandfraudsters.Fromtheconsumers
perspective,protectionfromfraudcanbeamongthe
mostimportantclientprotectionissues.Providersare
oftenwellpositionedtohelpidentifyandprevent
suchabuses.
2. RegulatoryGapsTraditionally,mostfinancialsectorregulatorshave
notexplicitlyaddressedclientprotectionandmarket
conductissues,astheirmandatefocuseson
prudentialregulationforfinancialsystemstability.
Thisischanginginmanycountries,particularly
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followingthe2008globalfinancialcrisis.Nevertheless,historicalantecedentscontinuetoshapelaws
andregulatoryinstitutions,withtheresultthatfinancialservicesclientprotectionregulationoftenfaces
aconfusedorincompletelegalandregulatorymandate.Consequently,financialsectorsupervisorsoften
lackthepowersneededtoeffectivelyprotectconsumers.Inlargerandmoredevelopedcountries,multipleagenciesoftenhaveoverlappingorunclearjurisdiction,whileinmanyoftheleastdeveloped
countries,asinglefinancialregulatorstillgiveslittleregulatoryattentiontoconsumerprotection.In
manycountries,thoseprotectionsthatexistdonotapplytoalltypesofproviders.Practicalchallenges,
suchasthecostofsupervisionandthelackofsupervisorycapacity,createroadblockstoprogress,as
doesthelackofafocaladvocacygrouporsinglecoordinatingchampionforconsumerprotectionina
country.
Atagloballevel,thereislittleinformationaboutthestatusofclientprotectionbycountry,inpart
becausetherearenorecognizedstandardsformeasuringit.Therolesofthestandard-settingbodiesin
thisareaarenotclearlydefined,andtherearefewexamplesofeffective,prudentmarket-conduct
supervisionofservicesaimedatlow-incomeclients.Thepoliticaleconomyofclientprotectionisoften
challengingandcanrunthegamutfromregulatorscapturedbyindustrytopoliticiansouttoget
industry.Moregenerally,ashortageofsufficientpoliticalwilltomakeclientprotectionaprioritycanbe
anissue.
3. ClientsVoicesAreOftenMissingInadditiontotheeducationalandexperientialdifferencesthatmakemanyclientsvulnerabletoabuse,
clientsoftenhavedifficultyadvocatingforthemselvesandrecognizingthattheyhavefinancialrights
duetoinformationimbalances.Thisisespeciallytrueforpoor,illiterateand/orruralclientswhomaybe
appreciativeofgettingaccessforthefirsttimeregardlessofquality.Clientsarerarelyorganizedor
representedinwaysthatallowtheircollectivevoicetobeheard.Consumergroupsarethinlystretched
inmanydevelopingcountries,areoftenfocusedonphysicalproducts,andareonlyrecentlystartingto
developcapabilitiestoaddressfinancialservices.
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PremisesUnderpinningtheRecommendations Therecommendationsthatfollowarebasedonanumberofpremisesaboutthemosteffective
approachestoclientprotection:
Clientprotectionisasharedresponsibility ofallactorsinthefinancialsystem,notjustregulators.
Inparticular, providersmusttakeproactiveresponsibility tointegrateclientprotectionintotheircorporatecultureandoperations.Effortstoencourageandequipproviderstodosoare
relativelyunderdevelopedandthusrepresentanimportantopportunity.
Clientprotectionregulationmustbetailoredtothecountrycontext. Somecountrieswillfavoramorerule-basedapproachwhileotherstakeaprinciple-basedapproach.Approachesthatare
tooabstractorambiguouscanhinderinvestmentsbyproviders.Somecountrieswillrequirea
highlysophisticatedapparatus,whileotherswillhaverelativelysimpleframeworks.
Importantly,theglobalcommunitygenerallysharestheprinciplesofclientprotection ,andthisagreementprovidesamajoropportunityforprogress. Strengtheningtheclientsabilitytoprotectthemselves bothindividuallyandcollectivelycould
helpachievethebalanceneededforsustainedclientprotection.Thisareaalsorepresentsa
majoropportunityforprogress.
Recentprogressprovidesmomentumforaction.Followingthefinancialcrisisof2008-2009,clientprotectionmovedfarupontheactionagendaforthefinancialsector,andthisincreased
attentionisnowbeginningtobearfruit.
In2011,partlyattheurgingofconsumergroups,
G20leadersendorsedhigh-levelprincipleson
financialconsumerprotectionandcalledforwork
tosupporttheprinciples.In2012,theWorldBank
developedcomprehensiveguidanceforregulators
ongoodpractices,andin2013,theSmart
Campaign,amicrofinance-focusedclient
protectioneffort,introducedathird-party
certificationprogram.Theseactionsarereinforced
bypolicyeffortsinmanydeveloping(e.g.,Rwanda,PeruandthePhilippines)anddevelopednations
(e.g.,theUnitedKingdom,theUnitedStatesandSouthAfrica)thatarecreatingorrefreshingnational
strategiesforconsumerprotectionandfinancialcapability.Withanincreasingnumberofinitiatives,the
globalstageissetforprogressonfinancialclientprotection.
IV.Recommendations
The Smart Campaign
The Smart Campaign is a provider-led initiative
to embed a set of client protection principles
deep within the fabric of the microfinance sector.
It offers training and tools, and it certifies
financial institutions that meet its standards.
Over 1,200 financial institutions worldwide haveendorsed the Smart Campaign.
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However,agreatdealofgroundislefttocover,andinmanycountries,thejourneyisonlystarting.
Successrequiresthethreemaingroupsofactorstocommittodotheirpart.Weenvisionamassive
campaigntobuildpoliticalandstakeholderwillandcapacitytoimplementclientprotectionwithinthe
decade.
Thefollowingrecommendationsaredividedintofourkeyactionareasforachievingclientprotection:
buildprovidercapacityandcommitmenttoimplement;improveregulationandmarketenvironment;
empowerclients;andadditionalactionstobuildpoliticalwill.
BUILDPROVIDERCAPACITYANDCOMMITMENTTOIMPLEMENTProvidersmusttakeactiveresponsibilityforimplementingclientprotection,bothasindividualfirmsand
collectivelyasanindustry.Werecommendthatfinancialservicesprovidersandtheirsupport
organizationstakethefollowingsteps:
1. Embrace Client Protection as a Core Part of the FinancialServices Profession
Developingacultureofclientprotectioninsideproviderorganizationsrequiresactionsmotivated
bothbyclientandemployeeloyalty.Employeesliketoworkforresponsibleorganizations;global
andnationalrankingsandawardscanprovideincentivesandclearstep-by-stepguidescanshow
theway.Coursestaughtbyassociationsandtrainingprogramsforbanking,insuranceand
microfinancecanalsoplayanimportantrole.
ActionPoint:AcorollaryofthiseffortcouldbeaFinancialConsumerBillofRightsfor
clientsbasedontheclientprotectionprinciples(detailedinAppendix1).
2. Drive Client Loyalty by Implementing Client ProtectionStandards
Broadlyacceptedprinciplesmustbetranslatedintospecificstandardsofresponsiblepracticethat
areseenasclientloyalty-building.Industrybodiesareimportantfocalpointsforstandard-setting,
anditisuptoeveryfinancialserviceprovidertointegrateacceptedstandardsintooperations,
includingthroughpolicies,marketing,stafftrainingand/orrewardsystems.
ProvidersSupport
Organizations
ProvidersSupport
Organizations
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IMPROVEREGULATIONANDMARKETENVIRONMENTThesinglemostimportantfocusforimprovingclientprotectionistheimplementationofeffectiveclient
protectionregulationsandsupervisionbyfinancialservicesauthoritiesineverycountry.
3. Promote Credible Certification and Self-Regulation
Providergroupsshoulddevelopcertificationprogramsand/orself-regulatorysystemsin
associations,governedbysustainablecertifyingbodies,toprovidethird-partyopinionsofcompliancewithclientprotectionprinciplesandtoimprovepracticeswhilebridgingthegapwith
formalregulation.Thisisespeciallyimportantinjurisdictionswithoutstrongregulation.Ensurethat
certificationbecomesatrustedtoolformicrofinanceandmainstreaminvestorsandevenclients.
4. Develop Systems to Spot Abuse of Vulnerable Clients by ThirdPartiesTrainstaffonfraudorexploitationwarningsignals.Implementelectronicfrauddetectionsystems
torecognizeunusualpatternsofbehavior(suchasthosealreadyinplaceforcreditcard
companies).
5. Make it a Global Commitment
Wecallontheglobalcommunitytoadoptasahigh-levelpublicgoaltheimplementationof
standardsforfinancialclientprotectionineverycountryby2020.Individualnationscanpublically
committotheirparticularintentionsinbankingviatheMayaDeclarationsponsoredbytheAlliance
forFinancialInclusion(AFI)andinsurancewiththeInternationalAssociationofInsurance
Supervisors(IAIS).
ProvidersSupport
Organizations
ProvidersSupport
Organizations
SupportOrganizationsRegulators
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6. Implement National Client Protection Regulatory Frameworks
Everycountryshouldimplementaregulatoryframeworkbasedongloballyacceptedprinciples(see
Appendix1).Characteristicsofgoodframeworksare:
Adaptedtonationalcontexts,emergingtechnologies,clientneeds,andlegal,regulatory
andinstitutionalframeworks,followingtheconceptofproportionateregulation.
Coverallprovidersoffinancialservices.
Basedonevidenceidentifyingthemostimportantproblemsandwhatworkstoprotect
clients.
Developedindialoguewithfinancialserviceprovidersandconsumers.
Minimizecostsofcompliancetoavoidrestrictingtheavailabilityofserviceswhile
contributingtogenuineprotection.
IncludesdepositandinsuranceguaranteeschemesstructuredinlinewiththeCore
PrinciplesforEffectiveDepositInsuranceSystemsdevelopedbytheBaselCommitteeonBankingSupervisionandInternationalAssociationofDepositInsurers(IADI).
Backedbyeffectivesupervisorswithlegalenforcementbodiesthathaverealteethandthat
allowforanappealprocessbyproviders.
7. Ensure That Clients Have Access to Effective RecourseSystems
Everycountryneedstohaveinplaceredresssystemsorombudsmanthatspecializeinfinancial
servicesandhasjurisdictionalpowertoact.Thesesystemsmustbewidelyavailable,freetouseand
knowntoclientsandmusthaveameanstoassistclientswithabusescomingfromthirdparties.
Regulatorsshouldalsomonitorthemarketbyproactivelylookingforpatternsthatsuggestscams
andschemes.
SupportOrganizations
Regulators
Regulators
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8. Build National Capacity to Design and Implement ClientProtection Regulation
Globalandnationalsupportorganizationsshouldallocateresourcesatasignificantlyincreasedpacetoaiddevelopmentofregulatoryandsupervisorycapacityforclientprotection.Whilecurrent
efforts,suchasthoseofAFIandtheTorontoCentreareofhighquality,theirscaleandcoverageis
insufficient.Allsupervisorswhoneedtrainingshouldreceiveitby2016.Thetypesofsupporting
resourcesneededinclude:
Guidanceandtoolkitsrelatingtoeachoftheclientprotectionprinciples.
Casestudiesofhowclientprotectionhasbeenimplemented.
Modellegislation,manualsandmonitoringandevaluationframeworks.
Technicalassistanceforassessingthecurrentstatusofacountrysconsumerprotection
environment,developinglegislation,policyandregulationsandsettingupenforcement
mechanisms.(Example:expansionoftheWorldBanksfinancialconsumerprotectionassessmentprocess.)
Exchangesamongregulatorsforpeer-learning.
9. Ensure Client Protection Keeps Pace With TechnologicalDevelopments
Regulatorsmustkeeppacewithchangesandensurethatnewtechnologiesareallowedtodevelop
andemergewhilecloselymonitoringnewdevelopmentsandtheirusagetoensureclientsrights
anddataareprotected.Asdemonstratedwithonlinecommerce,onceclientsfeeltheyhave
protectionsandrecourse,themassmarketofconsumersaremorelikelytoadoptinnovations.
SupportOrganizationsRegulators
Capacity-BuildingAgenda
Regulators Technology-EnabledBusinessModels
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EMPOWERCLIENTSWhilelower-incomeclientscanbeeffectiveadvocatesforthemselves,arangeofactorscanassistthemin
raisingtheirvoices.Somesucheffortsareamongthemostinnovativepossibilitiesintherealmofclient
protection.Withthatinmind,wemust:
10. Develop Means for Clients to Raise Their Own Voices
Providersshouldincorporatetheclientvoiceattheboardandseniormanagementlevels.Client
protectionproblemsmightbeminimizedifdecision-makersregularlyhearclientsperspectives.This
couldbeaccomplishedthroughsuchmeansasclientownership(aswithcreditunions)oruseof
regularclientopinionresearchandcanbesupportedbyanombudsmanspublishingofcomplaints
andpositivedatathatclientscanusetochooseprovidersandthatincentivizeproviderstobecome
moreclient-responsive.
ActionPoint:Anespeciallypromisingareaistocreateforumsforclientstovoicekudosandcomplaintsregardingfinancialservicesproviders(e.g.,aTripAdvisorforfinancial
services).
11. Develop Client Financial Capability Through MultipleChannels
Inthiscontext,thefocusistoensurethatconsumerrightsandresponsibilitiesreceiveemphasis
throughoutfinancialeducationprogramming,whetherprovidedbygovernment,independentorganizationsorproviders.
12. Continue Base of the Pyramid Client Research to InformClient Protection Policymaking and Program Design
Particularlyimportantare:
Researchthatrevealsclientviewsandconcerns,
Behavioralresearch.
Developmentofnational-levelclientprotectionindicators.
Thelatterholdsparticularpromiseforcraftingeffectiveinterventions.
ProvidersSupport
Organizations
FinancialCapabilityProviders
SupportOrganizationsRegulators
SupportOrganizations
ResearchAgenda
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ADDITIONALACTIONSTOBUILDPOLITICALWILL
13. Articulate the Benefits of Client Protection for Clients,Providers and General Economic Stability
Buildingbusinessandsocialcasesforclientprotectionrequiresmetricsformonitoringclient
protectioneffectiveness,micro-levelresearchonclientoutcomes,dataonthecostsand,
potentially,revenuegrowthviaincreasedloyaltyforprovidersthatimplementthestandards.
Supervisorscanuseconsumerprotectionasaforward-lookingindicatorofrisk.
14. Build the Capacity of Media and Consumer Advocacy Groupsto Focus on Financial Consumer Protection, and Ensure thatPolitical Leaders Hear All Voices Before Enacting Legislation
Consumergroups,togetherwithfairmediaeducatedonfinancialissues,cangeneratepoliticalwill
toimproveclientprotection.
ResearchAgenda
SupportOrganizationsProviders
SupportOrganizations
Capacity-BuildingAgenda
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Annex 1. Principles of Financial Consumer Protection Compared
G20High-LevelPrinciples
onFinancialConsumer
Protection
GoodPracticesfor
FinancialConsumer
Protection
ClientProtection
Principles
Legal,Regulatoryand
SupervisoryFramework
__
__
RoleofOversightBodies ConsumerProtectionInstitutions __
EquitableandFairTreatmentof
Consumers
CustomerAccountHandlingand
Maintenance
Fairandrespectfultreatment
ofclients
DisclosureandTransparency
DisclosureandSalesPractices Transparency
FinancialEducationand
Awareness
ConsumerEmpowerment&
FinancialLiteracy
__
ResponsibleBusinessConductofFinancialServiceProvidersand
AuthorizedAgents
__ Responsiblepricing
ProtectionofConsumerAssets
againstFraudandMisuse
__ __
ProtectionofConsumerData
andPrivacy
PrivacyandDataProtection Privacyofclientdata
ComplaintsHandlingand
Redress
DisputeResolutionMechanisms Mechanismsforcomplaint
resolution
Competition Competition&Consumer
Education
__
__
DepositInsurance&Insolvency __
__
__ Appropriateproductdesign
anddelivery
__ __ Preventionofover-
indebtedness
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Annex 2. Initiatives We Endorse
AllianceforFinancialInclusion(AFI) Asaconveneroffinancialinclusionregulatorsandsponsorofthe
MayaDeclaration,AFIhasauniqueroleinbuildingregulatorycommitmenttoandknowledgeaboutappropriateclientprotectionregulation.AFIsworkinggrouponconsumerempowermentandmarket
conductisafocalpointfortheseefforts.
ConsumersInternationalAnindependent,globalcampaigningvoiceforconsumerswithover220member
organizationsin115countries,CIbeganacampaignonfinancialconsumerprotectionin2011andhelped
movetheG20toaction.
ConsultativeGrouptoAssistthePoor(CGAP) AWorldBankresourcefordonors,policymakersand
providersforfinancialinclusion,CGAPisanimplementingpartneroftheGPFIandathoughtleaderon
consumerprotection,amongotherareasoffinancialinclusion.
GlobalPartnershipforFinancialInclusion(GPFI) AninclusiveplatformforallG20countries,interested
non-G20countriesandotherrelevantstakeholderstocarryforwardworkonfinancialinclusion,including
implementationoftheFinancialInclusionActionPlan,GPFIwasendorsedattheG20SummitinSouthKorea.
CountriesLeadinginConsumerProtection Perfectioninconsumerprotectionisnotanattainablegoal,but
theideashouldhelpusdesignacoresetofprotections.High-incomecountriesincludingCanada,theUnited
Kingdom,Australia,theNetherlandsandtheEuropeanUnionasawholehavesomestrongconsumer
protectionsinplace.Lower-andmiddle-incomecountrieswithreasonablystrongconsumerprotectionfor
financialservicesincludeSouthAfrica,Mexico,Malaysia,PeruandArmenia.
InfoNETAglobalnetworkof54national-levelfinancialsectorombudsmanfrom36countries,InfoNET
providestrainingandsupporttoitsmembersandemergingmarketombudsmen.
MicrofinanceTransparencyPromotesmicrofinancepricingtransparencybypublishingpricingdataand
promotingpublicdisclosureandeducation.
OrganizationforEconomicCo-operationandDevelopment Aforumforgovernmentsto developpolicies
thatwillimprovetheeconomicandsocialwell-beingofpeoplearoundtheworld,theOECDdeveloped9
principlesonfinancialconsumerprotectionthatwereendorsedbytheG20.Theorganizationisalsoplayinga
leadroleinestablishingtheInternationalFinancialConsumerProtectionNetwork(FinCoNet).
SmartCampaign Aglobalefforttounitemicrofinanceleaderstoembedasetofclientprotectionprinciples
intothefabricoftheirindustry,housedattheCenterforFinancialInclusion.
TreatingClientsFairly AprincipleoftheUKFinancialConductAuthoritywherebyfinancialserviceproviders
mustdemonstratethattheyareconsistentlydeliveringfairoutcomestoconsumers,thisapproachrequires
seniormanagementtotakeresponsibilityforensuringthatfinancialserviceprovidersestablishan
appropriateculturebackedbyoperatingnormsapplicabletostaffatalllevels.
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www.financialinclusion2020.org
Roadmap to Financial InclusionClient ProtectionSeptember 2013
WorldBankTheWorldBankhasestablishedacommunityofconsumerprotectionandfinancialliteracy
practices,includingacomprehensive2010surveyonthestatusofconsumerprotectionregulatory
frameworksand39goodpracticesforfinancialconsumerprotectionatanationallevel.
Thisworkingpaperwascreatedthroughaseriesofconsultationswithanexpertsworkinggroupon
ClientProtection.WewishtoexpressourgratitudetotheClientProtectionWorkingGroupmembers
fortheiractiveparticipationingroupdiscussionsandthoughtfulcontributions.
Wealsothankthemanyadditionalexpertswhorevieweddraftsofthepaperandprovidedinput.
Finally,wewishtothankthemanyCFIandAccionstaffmemberswhoprovidedsupportincluding
AllisonBernstein,MereneBotsio,ElizabethDavidson,AnitaGardeva,SonjaKellyandAmandaLotz.
TheCenterforFinancialInclusionacceptsresponsibilityfortheviewsexpressedinthispaper.Those
viewsdonotnecessarilyreflecttheviewsofindividualworkinggroupmembersortheir
organizations.
ExpertsWorkingGrouponClientProtection
ElisabethRhyne,CenterforFinancialInclusion
(Co-chair)
DavidGrace,Consultant,U.S.(Co-chair)MichaelChapman,OrganisationforEconomicCo-
operationandDevelopment(OECD)
JohannaJaeger,WorldBank
AshokNarain,Consultant,India
BrigitteKlein,DeutscheGesellschaftfr
InternationaleZusammenarbeit(GIZ)
KarenNiederkohr,Consultant,U.S.AndrewPospielovsky, Consultant,Egypt
CliffordRosenthal,U.S.ConsumerFinancial
ProtectionBureau
MichaelBurbano,Ecuador
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This publication was produced by Financial Inclusion 2020:
1101 15th Street NW, Suite 400, Washington, DC 20005 USA Tel 202.393.5113 Fax 202.393.5115