Thursday, 10 January 2013

We need effective consumer representation in financial services

CI’s Justin Macmullan comments on the noticeable absence of civil society organisations in the recent deluge of activity regarding financial consumer protection.

It’s a risky business balancing on a two-legged stool, but that is what a lot of international initiatives on financial consumer protection are proposing by relying too much on governments and the industry and not paying enough attention to the role of civil society.

There has been a rush of international activity in relation to financial consumer protection in recent years.

To name a few of the initiatives (with apologies to those I miss) we now have: the World Bank’s best practices on financial consumer protection; the G20 endorsed OECD high level principles and the development of ‘effective approaches’ for their implementation; a new sub group at the Global Partnership for Financial Inclusion; the formalisation of FinCoNet, the network of financial supervisors; and the industry-led SMART campaign that is seeking to improve client protection in the microfinance sector.

This is all very welcome, but look closely and there is something missing.

Most of these initiatives are discussions between governments with the aim of developing guidelines to support governments (the exception, of course, is the SMART campaign that is an industry initiative).

Of course, within the constraints created by a lack of resources and the limited scope of consultations, CI has submitted position papers, responded to draft texts and organised consultations with our members to feed into the international processes.

However, in most cases civil society barely features in the ultimate aim of these initiatives and, where it does, there is little practical assistance to strengthen its hand.

This is a serious omission that ultimately threatens the ability of these initiatives to deliver good outcomes.

Civil society and consumer organisations need to be more involved in the development of international initiatives and – crucially – in their implementation at the national level. Most people now accept that an open and participative debate produces better results – the challenge is how to ensure this happens.

Initiatives to achieve this should set aside time and resources to support civil society’s engagement with their processes and put serious thought into how to support civil society’s role in the future.

Alongside this there needs to be a parallel process that systematically seeks to support and develop consumer organisation’s voices on financial services at the international and national level.

The following issues need to be addressed:
  • Resources to support consumer representation at the international and national level. Consumer organisations struggle to have the same influence as other groups such as the financial services industry. Some bodies, such as the European Commission and some governments, have responded with an enlightened policy of supporting consumer representation in financial users groups, but this is still rare.
  •  Open processes that allow consumer organisations to participate in the development of international and national policy making on financial consumer protection. Internationally and nationally civil society still struggles to be heard in many processes. Ensuring consumer organisations are represented and have access to documents should be a prerequisite.
  • Where necessary, support should also be given to ensure consumer organisations have the resources and skills to deliver services for consumers of financial services. This will not only ensure consumers have access to advice and representation, it will also play an important role in developing consumer group own expertise and insight.
Improved consumer input is absolutely necessary to the delivery of more appropriate and relevant policies that respond to the real challenges facing consumers of financial services. It will also help governments and providers to be better informed about the implementation of policies and new challenges facing consumers.

And last but not least, consumers will have access to the advice and services they need from organisations they trust and that exist to represent them alone.


  1. It's the same story in the area of intellectual property, too. A number of countries (including the USA and Australia just to name two) are developing policies for dealing with online copyright infringement. Government, copyright holders and online intermediaries are involved in these discussions. Consumer representatives are not. We can point to best practices in other fields such as environmental and Internet governance that are being ignored here. See a paper that I wrote on this at

  2. Great blog nice n useful information , it is very helpful for me , I realy appreciate thanks for sharing. I would like to read more information thanks.

  3. I am really impressed ! Congratulations from Bangladesh! I have come some advice to your success. Thanks for sharing.....Victor Jung NBC