Financial consumer protectionencompasses the laws, regulations, and institutional arrangements that safeguard consumers in the financial marketplace. This section offers resources developed by our staff and partners thatinclude technical guidance, country reports, and tools for policymakers, regulators, development partners and other experts.
An Introduction to Developing a Risk-Based Approach to Financial Consumer Protection Supervision : Guidance Note (English)
December 2022
Financial products and services play a significant role in enabling consumers to build their resilience, seize opportunities, and meet essential needs. However, consumers also face a range of risks when engaging with such products and services. For financial consumer protection (FCP) to be helpful in mitigating such risks, effective FCP supervision, in addition to regulation, is essential. However, authorities’ supervisory resources are always limited. The reality of limited resources is typically even more acute in emerging markets and developing economies. Authorities around the world are therefore increasingly focusing on implementing ‘risk-based’ supervision (RBS) for FCP. RBS is intended to focus limited resources on the most important issues within an authority’s supervisory scope, in a forward-looking and proactive manner. This Note provides guidance on key issues and decisions that authorities should consider when establishing FCP RBS.
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Consumer Risks in Fintech - New Manifestations of Consumer Risks and Emerging Regulatory Approaches : Policy Research Paper (English)
April 2021
Fintech is increasingly recognized as a key enabler for financial sectors worldwide, enabling more efficient and competitive financial markets while expanding access to finance for traditionally underserved consumers. A critical challenge for policy makers is to harness the benefits and opportunities of fintech while managing its risks, including for consumers. The COVID-19 pandemic further accelerated the widespread transition of consumers to fintech and digital financial services, highlighting their significant benefits while also demonstrating how risks to consumers can increase in times of crisis and economic stress. This paper (1) identifies a range of consumer risks posed by fintech, focusing on four key fintech products (digital microcredit, peer-to-peer lending, investment-based crowdfunding, and e-money) and (2) discusses consumer protection regulatory approaches emerging internationally for policy makers to consider when developing regulatory policy to target such risks. Examples of regulatory approaches are drawn from country examples and international literature. The paper also discusses a range of implementation considerations.
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Key Facts Statement Testing: Options, Methodologies, and Tools - Financial Inclusion Support Framework: Technical Brief (English)
November 15, 2021
Disclosure and transparency are cornerstones of financial consumer protection and are key drivers of trust in the financial system. A key facts statement (KFS) is an important tool to improve transparency and disclosure of information for financial products through the adoption of a standardized format that is designed to convey information in a simple and easy-to-understand manner. The design of a KFS is central to its success. Testing a KFS is an important part of the design process and ensures that a KFS is designed in a way that reduces information asymmetry between consumers and providers of financial services most effectively. The purpose of rigorously testing a KFS is to assess how different versions of a KFS influence the understanding of product terms and conditions, as well as the consumer decision-making process. KFS testing can identify and recommend improvements to the KFS. It does so by testing: (1) participants’ design and content preferences; (2) the information on which they typically focus; (3) questions that arise with regard to the content and design; (4) the amount of information that participants can comprehend and process; and (5) how different presentations of information alter participants’ decision-making. This report recommends prioritizing focus groups as a tool that can address the majority of KFS-testing needs.
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The Next Wave of Suptech Innovation
Around the world, financial sector supervisors are experiencing a profound shift to data-driven supervision enabled by the next wave of technology and data solutions. While technology and data are not new to financial oversight, their specific application to financial consumer protection and market conduct supervision has become more widespread and sophisticated in recent years. Expanding on the World Bank’s 2018 note on supervisory technology, or suptech, this technical note catalogues a range of specific solutions that financial authorities are deploying to help increase the efficiency and effectiveness of market conduct supervision. The note identifies four categories of suptech solutions (regulatory reporting, collection and processing of complaints data, non-traditional market monitoring, document and business analysis) and provides concrete examples of 18 different suptech solutions for market conduct supervision, drawing from the experiences of 14 financial sector authorities worldwide. The note also discusses implementation considerations and enablers of successful suptech adoption commonly experienced across countries.
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Complaints Handling within Financial Service Providers : Principles, Practices, and Regulatory Approaches
Core to an effective financial consumer protection framework is an accessible and efficient recourse mechanism that allows consumers both to know and to assert their rights to have their complaints addressed and resolved in a transparent and just way within a reasonable timeframe. Complaints handling mechanisms are especially important for low-income and vulnerable financial consumers, to whom timely and effective recourse processes can have a decisive influence over their trust in their financial service provider (FSP) and in the financial sector in general. Increased trust contributes to consumers' uptake and sustained usage of financial services and, consequently, their economic livelihoods.
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Product Design and Distribution : Emerging Regulatory Approaches for Retail Banking Products
This note discusses emerging international approaches for regulating design and distribution of retail banking products. Such products include deposit, credit, and payment products, being the products that new financial consumers typically acquire first. Policy makers are finding that financial consumer protection measures implemented to date, such as disclosure requirements, while still important, are insufficient to protect consumers against all key risks. Anticipating new or changing risks to consumers has also become more difficult for regulators given rapid financial sector innovation.
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Good Practices for Financial Consumer Protection, 2017 Edition
Since the 2012 edition (available below), international guidance and country practices regarding financial consumer protection have substantially evolved. The 2017 Good Practices is a comprehensive reference and assessment tool for policymakers that consolidates the latest research, international guidance, and country examples. A thorough update of the previous edition, this guide emphasizes implementation aspects and expands upon priority areas such as supervisory techniques, effective disclosure, and digital finance.
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Global Financial Inclusion and Consumer Protection Survey, 2017 Report
This report presents the main findings of the 2017 Global Financial Inclusion & Consumer Protection (FICP) Survey. The 2017 Global FICP Survey tracks the prevalence of key policy, legal, regulatory, and supervisory efforts to advance financial inclusion and financial consumer protection. Financial sector authorities in 124 jurisdictions - representing 141 economies and more than 90 percent of the world’s unbanked adult population - responded to the 2017 Global FICP Survey. See also: 2013 Global CPFL Survey (available below).
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From Spreadsheets to Suptech: Technology Solutions for Market Conduct Supervision
Effective market conduct supervision is critical to ensuring that financial consumers are protected from unfair business practices and provided with clear information. This discussion note examines the use of Suptech (supervisory technology) solutions to improve market conduct supervision. It also provides case studies of Suptech applications in the U.S, Lithuania, and Brazil, and highlights the risks and challenges that may arise with Suptech.
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Financial Consumer Protection and New Forms of Data Processing Beyond Credit Reporting
New sources of data and new ways to process data have contributed to an ongoing expansion in the availability of digital financial services. Such data can be used to design and market customer-centric products, create credit scores for consumers with limited credit histories, meet and facilitate know-your-customer requirements, and minimize the risk of fraud. Yet a great variety of personal information may be processed in this context. This discussion note provides an overview of benefits and risks arising from the use of new types of data and identifies areas for further research.
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Developing a Key Facts Statement for Consumer Credit
This technical note provides practical guidance to policy makers seeking to develop key facts statements (KFSs) for consumer credit products. Misleading or incomplete information on fees and risks can result in consumers choosing products not well-suited to their needs, potentially harmful to consumer welfare. KFSs provide key information on terms, conditions, fees, and total costs, in a clear standardized format. The note shares the key principles, international good practices, and lessons learned in developing KFSs that can help achieve better consumer comprehension.
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COUNTRY DIAGNOSTICS
Ethiopia Diagnostic Review of Financial Consumer Protection
YEAR: 2017
The Diagnostic Review of Financial Consumer Protection in Ethiopia assesses the legal, regulatory, and institutional framework for financial consumer protection (FCP), with a focus on retail products and services in four sectors: i) banks and non-bank financial institutions (NBFIs); ii) payments; and iii) insurance. The assessment covers five topics in each of the above-mentioned sectors: i) legal, regulatory, and supervisory framework; ii) disclosure and sales practices; iii) fair treatment and business conduct; iv) data privacy; and v) dispute resolution mechanisms, based on which the report develops prioritized and tailored recommendations aimed at supporting the National Bank of Ethiopia (NBE) in developing and operationalizing improvements to the FCP framework.
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Papua New Guinea - Financial Consumer Protection Diagnostic 2018
YEAR: 2018
This diagnostic review assesses the legal and regulatory framework and industry practices in financial consumer protection (FCP) in the key segments of Papua New Guinea's regulated financial sector: banking, non-bank financial institutions (NBFI), insurance, and payments. Preliminary consideration has also been given to the superannuation sector and securities. Investments and informal sectors were not covered. The report was prepared as part of the PNG Financial Consumer Protection Project, funded by the Department of Foreign Affairs in Australia and the Ministry of Foreign Affairs in New Zealand under the PNG Partnership.
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South Africa Retail Banking Diagnostic
YEAR: 2018
This 2018 diagnostic analyzes provision of consumer transactional accounts and fixed deposits by retail banks in South Africa. The primary aim was to identify potential deficiencies from a fair-treatment perspective in banks’ provision of such accounts and deposits, and how any identified major fair-treatment deficiencies could appropriately be addressed through market conduct regulation, with regard to international good practices and the South African market context. This report sets out the findings of the diagnostic and provides recommendations for regulatory improvements and related measures for consideration by the South African authorities.
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Nigeria Diagnostic Review of Financial Consumer Protection
YEAR: 2017
The objective of the Diagnostic Review of Financial Consumer Protection in Nigeria is to assess the legal, regulatory, and institutional framework, industry practices and related new initiatives for financial consumer protection (FCP) applicable to the banking, non-bank financial institution (NBFI) and payment sectors and develop prioritized and tailored recommendations aimed at supporting the Central Bank of Nigeria (CBN) in enhancing the FCP framework and its implementation. The assessment is conducted based on the revised and enhanced World Bank Good Practices for Financial Consumer Protection and covers five topics in each of the above-mentioned sectors: i) legal, regulatory, and supervisory framework; ii) disclosure and sales practices; iii) fair treatment and business conduct; iv) data privacy; and v) dispute resolution mechanisms.
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Ghana Diagnostic Review of Financial Consumer Protection
YEAR: 2016
The objective of the Diagnostic Review of Financial Consumer Protection in Ghana was to assess the legal, regulatory, and institutional framework for financial consumer protection and develop prioritized and tailored reform recommendations. The assessment is based on the revised and enhanced World Bank Good Practices for Financial Consumer Protection (forthcoming) and focuses on retail products and services in four sectors: i) banks and nonbank financial institutions (NBFIs); ii) payments; and iii) insurance. Further, the review covers five topics in each of the above-mentioned sectors: i) legal, regulatory, and supervisory framework; ii) disclosure and sales practices; iii) fair treatment and business conduct; iv) data privacy; and v) dispute resolution mechanisms. The report was based on the review of the existing legal and regulatory framework, as well as planned reforms (e.g. draft regulations) that were presented to or discussed with the World Bank team. It also features industry practices based on anecdotal evidence gathered through interviews with financial services providers, financial regulators, and consumer and industry associations. The report was prepared as part of the Swiss State Secretariat for Economic Affairs’ (SECO) Global Trust Fund for Consumer Protection and Financial Literacy.
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ALL PUBLICATIONS
- Financial Consumer Protection and New Forms of Data Processing Beyond Credit Reporting
- Developing and Operationalizing a National Financial Inclusion Strategy : Toolkit
- From Spreadsheets to Suptech: Technology Solutions for Market Conduct Supervision
- Developing a Key Facts Statement for Consumer Credit
- Good Practices for Financial Consumer Protection, 2017 Edition
- Global Financial Inclusion and Consumer Protection Survey, 2017 Report
- G20 GPFI Technical Note on Institutional Arrangements for Financial Consumer Protection
- Global Mapping of Financial Consumer Protection and Financial Literacy Initiatives
- Establishing a Financial Consumer Protection Supervision Department - Lessons from Five Countries
- Global Survey on Consumer Protection and Financial Literacy - Oversight Frameworks and Practices in 114 Economies
- Public Sector Operated Price Comparison Websites
- Good Practices for Financial Consumer Protection
- Market Conduct Supervision in Small Countries: The case of Armenia
- Resolving Disputes between Consumers and Financial Businesses - Volume 1: Fundamentals
- Improving Protection in Financial Services for Bulgarian Consumers - ECA Knowledge Brief Volume 52
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