1. Last update: 2010 Bringing Smart Policies to Life The basics: Consumer protection

2. Consumer Protection: Definition “Consumer protection is generally considered to be a regulatory response to a market failure” Consumer protection laws are a form of government regulation which protects the interests of consumers Laws are designed to ensure fair competition and the free flow of truthful information in the marketplace

3. Consumer Protection: Benefits Without adequate consumer protection, benefits of financial inclusion can be lost Consumers make better decisions if they have the right information and they know what to do with it Market discipline facilitates financial market expansion Consumers, non-government organizations, financial institutions, and governments should work together to improve financial literacy and reap the rewards

4. Financial service protections Fair market prices / “Truth in Lending” Equitable treatment Disclosure Redress Financial education Credit Counseling Privacy

5. Policy Question: Regulation & Supervision Principles vs. rules based approach Determining supervisory capacity Balancing Protection vs. over-regulation

6. Policy Question: Role of others Role of Industry: standards for fair & equitable practices, self-regulation Role of consumers: rights & responsibilities, consumer advocates, baseline information about consumers’ financial capabilities

7. ACCION Center for Financial Inclusion: Microfinance Client Protection Principles Example of ‘code of conduct’ for microfinance industry self-regulation globally Avoidance of over-indebtedness Transparent pricing Appropriate collections practice Ethical staff behavior Mechanisms for redress of grievance Privacy of client data

8. Example: Philippines 9 million overseas workers sent $17.3 billion in remittances (10% of GDP in 2009) Bangko Sentral ng Philipinas conducts financial literacy campaign –via road shows in Singapore, Hong Kong, etc to educate workers on planning, savings, investing –Selected local areas

9. Example: Peru Complaints dropped 32% since 2004 holistic system of consumer protection SBS supervises policies & procedures that FI’s implement but does not directly respond to complaints FI’s themselves handled 99% of 400,000 complaints in 2008

10. Example: Peru Peru’s ‘Regulation of Transparency’ means cost information associated with financial services must be published in daily news Interest rates dropped 15% in first six months of this law

11. Thank you! © Alliance for Financial Inclusion 2010 info@afi-global.org www.afi-global.org