Consumer Protection/Financial Consumer Protection

Financial Consumer Protection refers to the laws, regulations and other measures generally
designed to ensure fair and responsible treatment of financial consumers in their purchase and
use of financial products and services and their dealings with financial services providers.
Financial Consumer Protection codes contribute to fairness and financial literacy for these
consumers.
The G20 and the OECD have played a pivotal role in supporting and elevating the
importance Consumer Protection and literacy worldwide. This role has continued with the
introduction of the High-Level Principles on Financial Consumer Protection.
The Principles aim to support policymakers in ensuring that consumers can benefit from
advancements in the financial landscape such as financial digitalisation, while mitigating
risks.
The G20/OECD High-Level Principles on Financial Consumer Protection are designed to
guide the development of effective and comprehensive financial consumer protection
frameworks. Such frameworks comprise policies, laws, regulations and other measures
generally designed to ensure fair and responsible treatment of financial consumers in their
purchase and use of financial products and services and their dealings with financial services
providers.
In this way, the FCP Principles underpin public trust and confidence in the financial system,
and support the financial inclusion and resilience of individuals and households.
Client Protection Principles
The FCP Principles are applicable to all financial market sectors (ie credit, banking,
payments, insurance, investments and pensions) and are designed to complement sector-
specific standards. The Principles can be applied in any country or jurisdiction, and are
cross-sectoral in nature.
 Legal, Regulatory & Supervisory Framework
Financial Consumer Protection should be a key element of legal, regulatory and
supervisory frameworks. These frameworks should outline the rights and responsibilities
of relevant actors and should be flexible and forward looking in order to adapt to new
risks and opportunities that will emerge such as digitalisation. Non-governmental
organisations such as consumers, small businesses and professional bodies should be
consulted whenever there is a change in policies relating to financial Consumer
Protection.
 Role of Oversight Bodies
There must be oversight bodies which are explicitly responsible for financial Consumer
Protection. These bodies should have clearly defined responsibilities and have the power
and appropriate resources to fulfil their mandates. Oversight bodies should ensure that
their policy, regulatory and supervisory actions appropriately account for their effects on
financial Consumer Protection. They should also cooperate with other financial services
oversight authorities to ensure a level playing field across financial products and services.
 Access & Inclusion
Oversight bodies should encourage financial inclusion among consumers by addressing
barriers to inclusion and by including financial inclusion objectives among their policies.
 These bodies should promote digitalisation where relevant, but should also recognise that
traditional forms of finance and cash may still be important to a lot of consumers.
 Financial Literacy & Awareness
Financial literacy should be promoted by relevant stakeholders and appropriate
mechanisms should be developed in order to increase financial literacy among consumers.
Consumers should know how to make informed choices, where to obtain assistance and
how to increase their financial literacy. Governing bodies should implement financial
literacy programmes that are easily accessible to consumers, particularly for vulnerable
consumers. These programmes should be available through a variety of channels,
including digital channels where necessary
 Competition
Competitive markets should be promoted in order to increase consumer choice, as well as
to create competitive pressures which will enhance innovation, encourage the production
of higher quality goods and offer more affordable prices. Competition between providers
should not be created at consumers’ expense, and consumers should be able to compare
data and switch providers with minimal cost.
 Equitable & Fair Treatment of Consumers
All consumers should be treated fairly and equitably throughout all interactions with
financial services providers. Fair consumer treatment should be a key element of the
corporate culture and governance of financial services providers. Providers should also
pay special attention to consumers who are experiencing vulnerability and should have
the means to support these consumers.
 Disclosure & Transparency
Consumers should be provided with key information relating to the products they are
buying, and all material from providers and intermediaries should be straightforward and
accurate. This transparency will enable consumers to make informed decisions and make
comparisons between different vendors offering similar products. This in turn will
encourage providers to address concerns of consumers and offer more desirable products.
 Quality Financial Products
Financial services providers should offer quality financial products that are designed in
order to meet the needs of consumers and contribute to their financial wellbeing. As a
result, providers may be required to conduct research and locate their target market in
order to create a more tailored end product for consumers.
 Conduct & Culture of Providers & Intermediaries
Financial services providers should have the best interests of consumers at the heart of
their operations. The culture and conduct of these providers should be aligned to promote
the fair treatment of consumers and improvement of their financial wellbeing. Providers
and intermediaries should be properly trained and qualified and should be able to provide
objective advice to a consumer, without conflicting interests.
 Protection of Consumer Assets against Fraud, Scams and Misuse
Relevant information, control and protection mechanisms should be put in place in order
to protect consumers’ deposits, savings and other financial assets in the cases of scam or
fraud. Transparent liability arrangements should be made available to consumers in the
 case of financial loss. Financial services providers should work with relevant stakeholders
to help promote awareness of digital security risks.
 Protection of Consumer Data & Privacy
Appropriate control and protection mechanisms should be put in place to protect
consumers’ financial and personal information. These mechanisms should outline how
consumer data is used, as well as the rights of consumers when consenting to share data.
Consumers should also be informed of data breaches potentially impacting their data.
 Complaints Handling & Redress
Providers should ensure that consumers have access to suitable complaints handling or
redress services where needed. These services should be efficient and fair, and consumers
should not incur additional costs or burden. Financial services providers should have
mechanisms in place to resolve complaints and improve consumer experience. In the case
where complaints are not resolved in an efficient manner, consumers should also have
access to an independent recourse process.
Major Provisions of NRB for Consumer Protection
 Establishment of Grievance Hearing Cell, chaired by Deputy Governor in 2062.
 Direction issued by Bank and Financial Regulation Department for financial literacy
and consumer protection in 2071.
 Establishment of Financial Consumer Protection Unit by monetary policy of 2076/77.
 Issue and implementation of Financial Consumer Protection and Grievance Handling
Procedure in 2077.
 Online Portal for grievance management from 2077/78.
 Establishment of Financial Inclusion and Consumer Protection Division in 2079.
 Direction no. 20 of Unified Directive, 2080 deals with financial literacy and consumer
protection for A,B and C level and Direction no 19 for D class
 Direction no. 18 for Infrastructure Development Bank.
 Direction no. 13 of Unified Directive, 2080 for Payment related institutions.
 Global Money Week
 NRB with Students
 Podcast
 Tuesday FinLit and use of Social Media
 Short Videos and Jingles etc.
Problems and Challenges on Financial Consumer Protection
 Reach of Financial Literacy Programmes
 Level of technological knowlwdge
 Emerging technlogies
 Effects of cooperative sector
 Complexity of financial products
  Weak grievance handling mechanism
 Lack of disclosure and transparency
 Non exixtence of data privacy laws and regulations
 Lack of consumer protection law
 Punishment and Penalty
 Weak inspection and supervision_ Market Conduct supervision
Also see the documents published by FICPD for further information