Protecting and Educating Consumers in the Financial Sector OECD Paris June 15, 2009 OECD Paris June 15, 2009 Brian Branch Executive Vice President & Chief Operating Officer World Council of Credit Unions

Consumer Protection and Education (CPE) Safeguarding of Consumer Interests in Terms of Quality, Price and Safety or … Providing Financial Services in Ways that Improve and do not Harm the Economic Well-being and Prosperity of the Consumer

What Will Drive This? 1.Public Pressure 2.Public Policy 3.Corporate Social Responsibility 4.Institutional Mission 5.Competitive Pressure

Push or Pull? PUSH 1.Public Pressure 2.Public Policy PULL 3.Corporate Social Responsibility 4.Institutional Mission 5.Competitive Pressure

1. Public Pressure Growing Demand for more Responsible Financial Institution Corporate Behavior Global Trends in Transparency of Financial Sector Greater Immediate Information Access via Internet Reputational Risks

2. Public Policy 1. Increased Legislation / Regulation for Transparency –Mandatory Standardized Disclosure & Reporting Requirements 2.Client Confidentiality –Data Protection 3.Ombudsman 4.Credit Bureau

5. Legislation / Regulation Limiting Application of Interest Rate and Fee Changes 6.Mechanisms for Redress 7.Interest Rate Caps 2. Public Policy (cont.)

3. Corporate Social Responsibility How will Corporate Social Responsibility Evolve in the Financial Services Sector Post ? Previously, Focused on Climate Change and Greening, Financial Access/Inclusion and Financial Literacy Now, Discussions Emphasize Responsible Lending, Consumer Protection and Financial Literacy From Corporate Social Responsibility To Consumer Protection & Education

4. Institutional Mission Degree of Acceptance will Vary whether Financial Institution is Mission or Shareholder Value-Driven Credit Union Objectives of Financial Empowerment …to advance financial and economic well-being of their members Micro Finance Institution Objectives of Financial Inclusion CPE driven by mission and business model … contributes to stakeholder mission and value

International Credit Union Consumer Protection Principles Disclosure of Rates and Fees Periodic Statements Honest and Non-Deceptive Promotions Fair Credit Practices Dignified Collection Practices Member’s Consent to Share Information Dispute Resolution Services Provide Education about Thrift and Wise Use of Credit Fair and Forthright Conversions

5. Competitive Pressures Is there a Competitive Advantage for Financial Institution in CPE? Minimizing Credit Risk Reputation for Business Conduct Becomes a Differentiating Brand Presence Builds Stronger Relationship with Clients / Members over Long Term

How Deep Will This Go? Charitable Exercise / Add-on or Business Strategy / Market Opportunity? Giving Money Away and Volunteering in the Community (CRA) Or Way of Contributing to the Bottom Line

Business Case for CPE Will Improved Practices, Industry Standards, Best Practices Become Established, Sustainable? Will Financial Institutions Establish Policy and Management Systems to Embed These into Their Operations and Report on Performance? Is There a Strategic Approach to Become a Business Opportunity?

Push or Pull? PUSH 1.Public Pressure 2.Public Policy PULL 3.Corporate Social Responsibility 4.Institutional Mission 5.Competitive Pressure

Thank you Brian Branch Chief Operating Officer & Executive Vice President World Council of Credit Unions