Promote Consumer Financial Protection .Gov’ts Told

By Samuel Boadi

Consumers International (CI) has urged governments all over the world to ensure fair consumer financial protection for their citizenry.
The recommendations, which form part of this year’s World Consumer Rights Day on March 15, are in response to the G20 commitment to address consumer protection in financial services at the Seoul Summit in November 2010, where CI and consumer organisations from G20 and non-G20 countries fervently campaigned.
CI, in a recent press release, said the launch of the recommendations will take place on May 21, this year.
Joost Martens, Director General of Consumers International, said: “There are as many bank accounts in the world as there are adults and 150 million new consumers join the market for financial services every year. Yet consumers around the world – in both rich and poor countries – are continuing to get a raw deal from banks and other financial service providers.
“These ground-breaking recommendations are the product of a shared sense of anger within the consumer movement that the rights of financial consumers have been neglected for too long. They provide a clear and comprehensive set of demands to significantly improve financial protection for consumers everywhere.”
The report, ‘Safe, fair and competitive markets for financial services: recommendations for the G20 on the enhancement of consumer protection in financial services,” calls for a new international organisation to support work on financial consumer protection.
It called for a permanent international organisation to enable national financial consumer protection bodies to share good practice, issue public alerts and develop minimum standards and guidelines.
It appealed to national regulators with full authority to investigate, halt and remedy violations of consumer protection law, including the right to define specific practices or products as unfair, deceptive or otherwise illegal.
Calling for clearer contracts, charges and practices, it said regulators should introduce a requirement of comprehensibility to remove from the market products that do not meet minimum standards. Again, it said financial advice to consumers should be separated from sales-based remuneration.
On effective redress and dispute resolution, the report said consumers should have access to adequate individual and collective redress systems.
It also touched on measures to promote stability and safety of consumers’ deposits and investments, including separation of investment and retail banking divisions, bank ‘living wills’ with guarantees for protecting consumer deposits, and reform of insolvency procedures to change the rank of creditors to put depositors at the top.
The report called for competition in financial services to help reverse the market concentration, which has contributed to the creation of institutions that are 'too big to fail' and also remove barriers that discourage consumers from switching accounts.
It said financial service providers should be asked to take more responsibility of ensuring consumers receive clear, sufficient, reliable, comparable and timely information about financial service products.
According to James Guest, CI’s Vice President and CEO of Consumers Union of the United States, “The 2008 collapse of the US sub-prime mortgage market was the starting point for what became the biggest financial crisis since the Great Depression. This crisis started with a failure of financial consumer protection and implementing CI’s recommendations will be a major step towards preventing such a catastrophe from ever happening again.
“Weak consumer protection in financial services is an unnecessary risk with disastrous consequences we cannot afford to repeat. We call on governments to pay urgent attention to the consumer movement’s demands.”
World Consumer Rights Day is an international day of action and awareness, observed by consumer organisations and civil rights groups around the world.
President John F. Kennedy on 15 March, told the US Congress: “Consumers by definition, include us all. They are the largest economic group, affecting and affected by almost every public and private economic decision, yet they are the only important group, whose views are often not heard.”