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WORLD BANK AMFA – Investors Fair Good Practices for Consumer Protection in Financial Services Baku, 7 October 2009 Juan Carlos Izaguirre Consultant Consumer.

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Presentation on theme: "WORLD BANK AMFA – Investors Fair Good Practices for Consumer Protection in Financial Services Baku, 7 October 2009 Juan Carlos Izaguirre Consultant Consumer."— Presentation transcript:

1 WORLD BANK AMFA – Investors Fair Good Practices for Consumer Protection in Financial Services Baku, 7 October 2009 Juan Carlos Izaguirre Consultant Consumer Protection & Financial Literacy World Bank

2 WORLD BANK 2 Limited Access to Finance Worldwide

3 WORLD BANK 3 Expansion of Household Credit Source: European Credit Research Institute, Central Bank of Azerbaijan Source: Unicredit

4 WORLD BANK 4 Consumer Protection & Financial Literacy expand Financial Sector Consumer protection increases legal protection for financial consumers & helps build consumer confidence. Financial literacy helps consumers understand financial products & services, rights & obligations. Consumer protection & financial literacy promote efficiency & transparency of financial markets, and help financial firms in facing risks.

5 WORLD BANK 5 Effective Financial Consumer Protection Framework Transparency: Full, clear, comparable & understandable information Choice: Fair, non-coercive advertising, selling & collection practices Redress: Inexpensive and speedy mechanisms to address complaints and resolve disputes Privacy: Control over access to personal financial information Access to financial education: Initiatives to develop financial capability of consumers

6 WORLD BANK 6 Diagnostic Reviews in 9 Countries

7 WORLD BANK 7 Good Practices: Diagnostic Tool Good Practices released as Consultative Draft Prepared for 4 segments: banking securities insurance non-bank credit institutions Other areas: private pensions credit reporting systems financial capability Available at: September 2009

8 WORLD BANK 8 Good Practices cover 7 key areas 1) Consumer protection institutions 2) Disclosure and sales practices 3) Customer account handling and maintenance 4) Privacy and data protection 5) Dispute resolution mechanisms 6) Guarantee and compensation schemes 7) Consumer empowerment and financial capability

9 WORLD BANK 9 1. Consumer Protection Institutions Clear consumer protection rules & necessary institutional arrangements Balance between prudential supervision and consumer protection Licensing and supervision of legal entities that collect funds or lend funds to the public Judicial system, media and consumer associations

10 WORLD BANK Disclosure and Sales Practices Key Facts Statements Standardized contractual provisions Written copy of terms and conditions Codes of conduct for financial institutions Financial firms to know their customers Cooling-off periods for products with savings components Free choice of providers of financial products and services Training of financial institutions staff

11 WORLD BANK Customer Account Handling and Maintenance Monthly account statements Notification of changes in interest rates, fees and charges Maintenance of up-to-date customer records and provide ready and free access to customers to their records Prohibition of abusive debt collection practices against consumers

12 WORLD BANK Privacy and Data Protection Clear rules for sharing customers information Basic consumer rights regarding information sharing, access and rectification Free access to credit reports Protection of confidentiality & security of customer data

13 WORLD BANK Dispute Resolution Mechanisms Each financial institution should have a complaints department Consumers should have access to affordable, efficient & independent mechanism for resolution of disputes Recourse mechanism to act impartially Statistics of customer complaints should be analyzed and published

14 WORLD BANK Guarantee Schemes and Insolvency Regulator to have authority to take prompt corrective action in event of distress at a financial firm Effective and timely payout mechanism if financial firm is insolvent High priority of depositors in liquidation of a financial firm

15 WORLD BANK Consumer Empowerment National financial capability programme Financial education in schools Use of mass media Financial regulators to publish independent information for consumers Role of non-governmental organizations Conduction of financial capability surveys

16 WORLD BANK AMFA – Investors Fair Good Practices for Consumer Protection in Financial Services Baku, 7 October 2009 Juan Carlos Izaguirre Consultant Consumer Protection & Financial Literacy World Bank


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