CI Head of Campaigns Justin Macmullan looks at two things the new leadership of the G20 is getting right in financial consumer protection
It was 18 months ago that G20 leaders meeting in Seoul, South Korea, respondedto CI’s call for international action to support financial consumer protection.
For much of 2011, whilst the French government held the G20 presidency, this new area of work received enthusiastic support from Christine Lagarde, the former French finance minister.
Now that the G20 presidency has moved to the Mexican government, what can financial consumers and their representatives expect?
Initial impressions are certainly good. On two of the key issues identified by CI, the Mexican government is saying the right things.
First, in line with the G20 declaration from Cannes last year, the Mexican government has called for the development of a set of guidelines for the implementation of the OECD high level principles on financial consumer protection.
When these principles were adopted by the G20 last November, CI was critical of the weak language that was used – though many of the issues covered were the right ones. These guidelines offer an opportunity to add some of the detail and clarity that was missing in the principles themselves.
The Mexican government has also given strong support to the development of an international organisation for national financial consumer protection agencies (FinCoNet). This was another key CI demand and one that was taken up by the Financial Stability Board (FSB) in their report on consumer finance protection.
Given the impact that failures in consumer banking and credit had on economies around the world, many would say it is remarkable that such an organisation doesn’t already exist.
So overall, the Mexican agenda looks about right. The concern of course is what the final content of the guidelines will be, how effective FinCoNet will be in delivering its mandate and the speed with which this work will be delivered.
On the content of the guidelines and FinCoNet’s effectiveness we will have to see, but CI will certainly continue to lobby for the strongest possible guidelines and support FinCoNet’s development into an effective international agency.
However, the wheels of international negotiation certainly turn slowly. The Mexican government has suggested a two-year timetable for the development of the guidelines.
In their Cannes declaration, the G20 committed to “pursue the full application of these principles in our jurisdictions and ask[ed] the FSB and OECD along with other relevant bodies, to report on progress on their implementation to the upcoming Summits.”
With this timetable, it is unlikely that any country will have their financial consumer protection reviewed before 2014 – a full four years after the G20 first agreed to address this issue. Is this just the price that has to be paid for international consensus?
In 2008, when the world was rocked by the biggest financial crisis in a generation, there was a real sense of urgency and determination that this sector should be reformed. Four years on, it is still a work in progress.
Put your question to the CI President
On 19 April, 17.30 GMT: CI President Jim Guest will be online with World Bank Live to take questions on financial consumer protection