1. WORLD BANK Consumer Protection & Financial Literacy in Azerbaijan Susan Rutledge Coordinator Consumer Protection & Financial Literacy Programs Baku, June 24, 2009

2. WORLD BANK Increasing Depth of Financial Sector reduces Poverty  Increasing the use of financial services from the level of Peru to Chile reduces the number of people living on just $1 per day. from 10% of the population to 5% or even lower (Beck, Demirguc-Kunt, Levine 2007) 1

3. WORLD BANK Consumer Protection & Financial Literacy expand Financial Sector Consumer protection increases legal protection for financial consumers  Builds consumer confidence  Encourages consumers to use financial services Financial literacy helps consumers understand financial products & services  Helps consumers make informed financial decisions  Helps consumers understand their obligations 2

4. WORLD BANK Rising Defaults in Household Loans can Pose Risks for Banks 3

5. WORLD BANK 4 Critical Areas 1. Simple, easy to understand consumer disclosure 2. Code of conduct for financial institutions 3. Fast, effective recourse mechanisms to handle consumer disputes 4. Effective financial education programs to improve financial literacy 4

6. WORLD BANK Consumer Disclosure should be Easy to Understand Key Facts Statement to have important terms and conditions on one page. Consumers should be able to compare offers by different providers. Full contracts should be easily accessible. 5

7. WORLD BANK Financial Institutions should follow a Code of Conduct Financial institutions should be obliged to act responsibly when selling financial services. Code of conduct should set high standards. Code of conduct helps consumers know they have rights—and responsibilities. 6

8. WORLD BANK Recourse Mechanisms need to be Effective Each financial institutions should have a complaints departments. Aggregate complaint statistics should be analyzed and published. A financial ombudsman could help consumers solve problems. 7

9. WORLD BANK Consumers also Need Financial Education Financial education is a long-term program. It belongs not just to Ministry of Education but also financial sector. Nationwide financial literacy survey of households can provide baseline assessment of current levels of financial literacy. 8

10. WORLD BANK Consumer Protection & Financial Literacy in Azerbaijan Susan Rutledge Coordinator Consumer Protection & Financial Literacy Programs Baku, June 24, 2009