1. Responsible Finance: New Frontiers and Challenges Policy and regulatory priorities to protect low- income financial consumers Foromic 2009 – Arequipa, Peru October 02 Denise Dias CGAP Policy Specialist Regional Manager for Latin America and the Caribbean

2. What is consumer protection exactly? Responsible finance: different tools and levels of implementation. Underdeveloped areas Consumer protection should ensure the customer: ▫Know and understand what they are getting; ▫Be treated fairly and ethically by the provider; ▫Have ways to lodge and timely resolve a complaint;

3. What rules should address? 1)comprehensible and comprehensive disclosure; 2) over-selling or mis-selling; 3)predatory or abusive conditions and behavior; 4)competition (pricing and switching); 5)data security; 6)recourse mechanisms. Implementation may be phased: basic package and “next generation menu”

4. Consumer protection in branchless banking Use of agents and technology introduce new twists to traditional concerns. Priority areas for protection in branchless banking: 1.Defining who regulates and supervises the nonbank provider 2.Ensuring protection of client’s funds in nonbank schemes 3.Keeping the provider (bank or nonbank) liable for the acts of the agents

5. Consumer protection in branchless banking Priority areas… continued: 4.Ensuring transparency for services outside branches 5.Ensuring effective redress coherent with the delivery channel 6.Ensuring service quality and reliability – need for coordination 7.Ensuring safety of personal data

6. The logical steps 1.Know the problem - problems faced by poor financial consumers, including in branchless banking 2.Find the answer - regulatory and non-regulatory measures. 3.Find the way - realistic evaluation of enforcement capacity and clarity of roles and resources. Includes justice system. 4.Evaluate the downsides - how rules impact access to formal financial services by the poor. Incremental or approach may be adequate to deal with trade-offs. 5.Increase interagency coordination and cooperation

7. Advancing financial access for the world’s poor www.cgap.org www.microfinancegateway.org