This weekend marks a significant moment in Consumers International’s advocacy and campaigning on financial consumer protection. CI Director General, Amanda Long, explains.
The financial crash in 2008 highlighted the appalling way that consumers of financial services were being treated by the banks, not just in the major economies but around the world.
Unfair contracts, hidden fees and charges, putting profit before basic consumer protections. For developing countries this was a serious concern as tens of millions of consumers were joining the market for financial services for the first time. CI members had been reporting this for years, but it was the financial crash that made it global headline news.
However, when the crash came it was the stability of the banks that received the attention of world leaders. It was not until CI and our members launched our campaign in 2010 that consumer issues were addressed.
Jump forward to November 2014, and the report on the latest international developments in financial consumer protection that G20 Finance Ministers and leaders will receive this weekend. It marks a major change in international efforts to support a better deal for consumers.
There are now a set of High Level Principles on Financial Consumer protection and a full set of ‘effective approaches’ to support their implementation. A first peer review of implementation is also in progress. FinCoNet (the international network for financial supervisors) is now a formal organization with staff, members and a work plan, and the Financial Stability Board has acknowledged the link between consumer protection and stability of the sector.
We have travelled a long road to get here.
When CI launched our campaign in 2010 we made a global call for G20 leaders to take action to strengthen financial consumer protection. Specifically we called for minimum standards relating to:
- Fair contract terms and charges for financial products and services.
- Information design and disclosure on financial products.
- The governance and functions of national financial consumer protection bodies.
In addition we called on the G20 to make recommendations for:
- The promotion of effective competition in markets for financial consumer services.
- The development of a permanent organisation for international standard-setting and coordination with regard to financial consumer protection.
Four years later significant progress has been made, quite an achievement at the international level.
The G20 and OECD have agreed the ten High Level Principles and a set of effective approaches to support their implementation. And we will shortly see how that work translates into action for consumers as the first voluntary peer review is underway, with the Central Bank of Ireland becoming the first financial conduct authority to be reviewed. The Netherlands Authority for the Financial Markets (AFM) is undertaking that assessment.
And in relation to another of CI’s demands, FinCoNet, the international network for financial consumer protection, is now a formal organisation with a strong membership and a good work plan including areas that CI has championed, including responsible lending and mobile payments.
Of course CI still wants to see much more effective consumer protection nationally and providers changing their policies and practices so the market offers products and services that are safe, fair and appropriate for consumers needs. This is a big challenge but one that consumer organizations are committed to delivering.
Whilst there is still much more to be done (and we may never be able to say that this work is complete) it is important to recognise that none of the international architecture was in place when CI launched its campaign in 2010.