The World Bank Group conducts diagnostic reviews of financial consumer protection institutional, legal, and regulatory frameworks at the request of our counterparts. These diagnostics help national authorities ensure that financial consumers receive clear information on financial products and services and are protected from unfair or abusive practices. More than 30 such diagnostics have been undertaken since 2009.
This Action Plan is based on the World Bank’s Technical Note on Consumer Protection and Financial Literacy in Azerbaijan published in June 2009. The Action Plan focuses on the Legal and Regulatory Issues of the Technical Note’s Key Findings and Recommendations, proposing specific actions for Azerbaijani authorities, financial institutions and consumer organizations so that consumer protection is strengthened and made more effective and efficient. The Action Plan should be the base upon which specific legal changes should be drafted and against which their implementation should be evaluated. Beside the Technical Note itself, the Action Plan draws on best international practices and experiences of regulators and supervisors that have tried to introduce improved consumer protection in their countries. It should also be noted that a well-balanced consumer protection regime serves also the interest of financial institutions as it provides them with better informed clients and also makes sure that clients understand their obligations under the contracts they signed. The Action Plan is divided into five parts that cover the key areas based on the recommendations of the Technical Note: (a) Legal Mandate, (b) Effective Supervision and Regulation, (c) Disclosure of Information, (d) Business Practices, and (e) Dispute Resolution.
This review covers the four main segments of the financial sector in Armenia: banking, non-bank credit institutions, securities, and insurance. The main objectives are: (i) to assess the existing financial consumer protection framework, by reviewing laws, regulations and practices in Armenia compared to international good practices; and (ii) to provide recommendations on ways to improve consumer protection and financial literacy in Armenia. Many crucial steps have already been taken in financial consumer protection in Armenia, especially at the regulatory and institutional levels. The review provides specific recommendations to improve institutional framework, consumer advocacy, consumer disclosure, regulation of business practices, complaint handling, and financial education. The review is presented in two volumes. Volume 1 emphasizes the importance of consumer protection in financial services and summarizes the key findings and recommendations of the Review. Volume 2 provides a detailed assessment of the institutional, legal and regulatory framework in the four selected segments of the financial sector, in comparison to the World Bank’s Good Practices for Financial Consumer Protection.
The Diagnostic Review emphasizes the importance of consumer protection in financial services, provides statistics on the size and growth of the retail financial sector in Azerbaijan, describes international and Azerbaijani strategies on financial consumer protection, identifies the key laws and institutions for financial consumer protection in Azerbaijan and sets out the key findings and recommendations of the Note. Volume 1 of the Review provides a comparison against good practices in Banking Sector, Insurance sector, Securities Sector and Micro Finance Institutions and provides a list of recommendations. Volume 2 provides key findings and recommendations.
This 2012 microcredit sector diagnostic review complements the 2011 review of the Banking sector and analyses the following five areas of consumer protection in microcredit: i) existing institutional arrangements, ii) consumer disclosure; iii) business practices; iv) dispute resolution mechanisms; v) and financial education programs. Bosnia and Herzegovina was the largest microfinance market in Europe and Central Asia until the 2008 global crisis prompted a rapid reversal. Authorities identified consumer protection in microfinance as high priority and introduced new regulatory provisions to stabilize the sector. This review analyzes the existing consumer protection framework and offers recommendations for further improvements. The Institutional Arrangements section covers the agencies responsible for implementing consumer protection, as well as industry and consumer associations. The section on Consumer Disclosure focuses on standard formats for price and product comparison, disclosure provisions, and basic rights of consumers. The Business Practices section covers unfair or abusive practices, standard consumer contract provisions, and industry Code of Conduct. The section on Dispute Resolution focuses on internal complaints mechanisms in financial institutions and out-of-court mechanisms. The section on Financial Education focuses on measures aimed at increasing consumer financial literacy and awareness.
This diagnostic study covers the areas of consumer protection and financial literacy in the banking sector of Bosnia and Herzegovina (BiH). Household credit in BiH more than tripled in volume in 2003-2008, and in terms of GDP it expanded from 13 to 26 percent. Foreign currency loans represented 10 percent of GDP. Official statistics showed growth in the percentage of non-performing loans since 2007. To strengthen consumer protection in the banking sector in BiH, this review recommends measures in five key areas: legislative and institutional reform, consumer disclosure, business practices of banks, dispute resolution mechanisms, and financial education. The main tasks of this study have been: (1) to review the existing rules and practices in BiH compared to international good practices; (2) to provide recommendations on ways to improve consumer protection and financial capability; and (3) to refine a set of good practices prepared by the World Bank for assessing consumer protection in banking services, including financial capability. The Review is presented in two volumes: Volume I describes BiH Government policy for banking consumer protection, provides the banking sector statistics, and sets out the key findings and recommendations of the Review. Volume II provides an assessment of the BiH consumer protection institutional and legal framework and practices against the benchmark of Good Practices for the banking sector.
This Review provides an assessment of the Bulgarian consumer protection framework and practices against the benchmark of good practices for five segments of the financial sector—banking, non-banking credit institutions, securities, insurance and private pensions. In addition, analysis of consumer protection and financial capability issues for the credit reporting system is provided. Volume 1 of the Review focuses on the assessment against Good Practices and Volume 2 provides the key findings and recommendations from the Review.
The 2008 global financial crisis has emphasized the need for adequate consumer protection and financial literacy for long-term stability of the financial sector. This Working Paper aims to summarize key lessons from reviews of consumer protection and financial literacy in the nine middle-income countries of Europe and Central Asia: Azerbaijan, Bulgaria, Croatia, the Czech Republic, Latvia, Lithuania, Romania, the Russian Federation and Slovakia. All the country assessments used a systematic common approach, based on a set of Good Practices for Consumer Protection and Financial Literacy developed by the World Bank's Europe and Central Asia Region. A financial consumer protection regime should meet three objectives. First, consumers should receive accurate, simple, comparable information of a financial service or product, before and after buying it. Second, consumers should have access to expedient, inexpensive and efficient mechanisms for dispute resolution with financial institutions. Third, consumers should be able to receive financial education when and how they want it. A common challenge among the nine countries is the need of an adequate institutional structure for financial consumer protection. Regardless of the specific institutional structures, financial consumers should have one single agency where to submit complaints and inquiries. Financial institutions should be required to apply fair, non-coercive and reasonable practices when selling and advertising financial products and services to consumers. Personal data should also be carefully protected.
This knowledge brief talks about the lessons learned from the Europe& Central Asia country study. It also provides the work has been done by World Bank Group and recommendations from World Bank Group.
Protection of financial consumers is one of the objectives of the European Union (EU) in developing a single market for financial services that can be sold across borders. Croatia’s Consumer Protection Act of 2007 incorporated many of the EU Directives related to financial consumer protection. The National Council on Consumer Protection established in 2008 is leading the way on the national strategy. Yet, the government of Croatia recognized the need for a more comprehensive approach and requested a diagnostic review from the World Bank. The Review is presented in two volumes. Volume I notes the importance of consumer protection and financial literacy, provides statistics on the size and growth of the retail financial sector in Croatia, describes the EU and Croatian strategies on consumer protection and financial literacy, and sets out the key findings and recommendations of the Review. The Annex provides examples of consumer protection codes. Volume II provides: (1) a detailed analysis of the key consumer protection issues in five segments of the financial sector—banking, non-banking credit institutions, securities, insurance and private pensions; (2) an assessment of the Croatia consumer protection framework and practices compared to the template of good practices; (3) a description of the key EU Directives related to consumer protection in financial services; and (4) a brief survey of financial literacy programs worldwide.
First in a pilot series of assessments in Europe and Central Asia, this report focuses on consumer protection in several parts of the financial sector including banking, consumer finance, insurance, private pensions, and collective investment funds. The series attempts to identify key components of strong consumer protection in financial services and stimulate debate on what reforms may be needed. This assessment reviews the existing rules and practices in the Czech Republic and suggests recommendations. The four main sections of the note, supported by four annexes, are: (i) Introduction sets the context and describes the methodology; (ii) Importance of Consumer Protection in Financial Services elaborates on the effects of consumer protection in financial services and implications of government intervention; (iii) EU framework & its implementation in the Czech Republic analyzes the existing legislation and the roles of the consumer protection institutions; (iv) Key Findings & Recommendations presents a diagnostic review of the sector with focus on institutions, sales practices and disclosure, account handling, dispute resolution mechanisms, compensation and other guarantee schemes, and consumer education and financial literacy. The annexes further cover: recommendations; practices in the sub-sectors of banking, insurance, and securities; ombudsman structures in the UK and Germany; EU Directives.
The Diagnostic Review of Financial Consumer Protection in Ethiopia assesses the legal, regulatory, and institutional framework for financial consumer protection (FCP), with a focus on retail products and services in four sectors: i) banks and non-bank financial institutions (NBFIs); ii) payments; and iii) insurance. The assessment covers five topics in each of the above-mentioned sectors: i) legal, regulatory, and supervisory framework; ii) disclosure and sales practices; iii) fair treatment and business conduct; iv) data privacy; and v) dispute resolution mechanisms, based on which the report develops prioritized and tailored recommendations aimed at supporting the National Bank of Ethiopia (NBE) in developing and operationalizing improvements to the FCP framework.
The report includes the results and analysis of a representative household survey regarding levels of financial literacy and consumer financial awareness in the West Bank and Gaza.
The survey on financial literacy among the citizens of Bosnia and Herzegovina was conducted within a larger project that aims at creating the Action Plan for Consumer Protection in Financial Services. The conclusion about the need for an Action Plan was reached by the representatives of the World Bank, the Federal Ministry of Finance, the Central Bank of Bosnia and Herzegovina, private sector supervisory authorities and non-governmental organizations, based on the World Bank's 2009-2010 Diagnostic Review in Bosnia and Herzegovina. The financial literacy survey, whose results are presented in this report, aims at establishing the basic situation with respect to financial literacy, serving on the one hand as a preparation for the educational activities plan, and on the other as a basis for measuring the efficiency of activities undertaken. The first section of the study deals with financial literacy and its various aspects. Based on these data, the Financial Literacy Index was derived (a single-dimension composite scale of financial knowledge and capability). Next sections deal with managing everyday financial choices (saving, covering shortages etc.) in the context of general household financial situation. Data collection was based on a random, nation-wide sample of citizens of Bosnia and Herzegovina aged 18 or older (N = 1036).
This first financial literacy survey in Bulgaria was conducted under the World Bank Program on Financial Governance and Consumer Protection in Financial Services. The Program aims to improve the levels of consumer protection and financial literacy and thereby strengthen consumer confidence in the financial sector. The objective of the survey was to assess the level of financial literacy and consumer confidence of households and to outline the peculiarities in different target groups prior to the implementation of the Action Plan for increasing financial literacy of the general population and, in particular, of low-income groups. The survey’s questionnaire is based on the model questionnaire used in Romania in order to compare the results between the countries. The report is structured in two main parts and three annexes. Part One covers methodological approach and research activities, and socio-demographic structure of the sample. Part Two presents the survey results in six chapters: (1) level of confidence in the financial sector; (2) awareness and consumer rights in the use of financial products; (3) financial literacy; (4) household financial management; (5) interest and use of financial products; (6) key findings and recommendations. There are three annexes: Survey questionnaire; frequencies of the survey questions; and cross-tabulations of all the questions by socio-demographic profile of the respondents.
This report outlines the fundamentals for the creation of an independent and effective financial ombudsman. It also summarises the current position in relation to consumer complaints against financial businesses in central/eastern Europe.
This report surveys the current position in establishing and developing financial ombudsmen and other financial ADRs in Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia
The objective of the Diagnostic Review of Financial Consumer Protection in Ghana was to assess the legal, regulatory, and institutional framework for financial consumer protection and develop prioritized and tailored reform recommendations. The assessment is based on the revised and enhanced World Bank Good Practices for Financial Consumer Protection (forthcoming) and focuses on retail products and services in four sectors: i) banks and nonbank financial institutions (NBFIs); ii) payments; and iii) insurance. Further, the review covers five topics in each of the above-mentioned sectors: i) legal, regulatory, and supervisory framework; ii) disclosure and sales practices; iii) fair treatment and business conduct; iv) data privacy; and v) dispute resolution mechanisms. The report was based on the review of the existing legal and regulatory framework, as well as planned reforms (e.g. draft regulations) that were presented to or discussed with the World Bank team. It also features industry practices based on anecdotal evidence gathered through interviews with financial services providers, financial regulators, and consumer and industry associations. The report was prepared as part of the Swiss State Secretariat for Economic Affairs’ (SECO) Global Trust Fund for Consumer Protection and Financial Literacy.
The brief outlines Bulgaria’s financial services industry and emphasizes the importance of financial consumer protection. It also gives recommendations to Bulgaria’s financial services industry.
Over the last decade, consumer credit in the Russian Federation has expanded from almost nothing to 9.2 percent of GDP in 2008. This is an average increase of 84 percent a year for five years. In four years, 2003-2007, per capita consumer borrowing in Russia skyrocketed from US$ 100 to US$ 1,200. Yet, the increases have been uneven throughout the Russian population: more than 40 percent are still financially excluded and only 16 percent have bank accounts. A 2008 survey found that Russian consumers had low levels of financial literacy and lacked awareness of their rights as financial consumers. Three-quarters of the survey’s respondents said they would like to receive financial education in order to protect themselves financially and plan for the future. Similar trends of the booming credit markets amid significant gaps in financial literacy around the world have contributed to the global financial crisis of 2008 and emphasized the importance of consumer protection and financial education programs for the long-term health of the financial sector. Responding to a request from Russian authorities, the World Bank conducted a diagnostic review to help Russia design an effective consumer protection and financial literacy framework. This note discusses the six key recommendations of the review and takes stock of the developments in Russia since the review has been completed.
This diagnostic study was undertaken by the World Bank in response to a request from OJK, the Indonesian Financial Services Authority, and Bank Indonesia, the nation’s central bank. Indonesia’s financial sector has a lot of growth potential considering the relatively low volume of domestic credit provided by the private sector – just 43% of GDP in 2012. To steer the growth to sustainability, the Indonesian authorities have emphasized financial consumer protection in the 5 Pillars of Indonesia’s National Strategy for Financial Inclusion. This Review aims to assist Indonesia in developing and implementing its national strategy and provides a detailed assessment of the consumer protection framework in six segments of Indonesia’s financial sector: banking, securities, insurance, non-bank credit institutions, private pensions, and credit reporting. This study also informed the design of the World Bank’s support program for Indonesia under the Financial Inclusion Support Framework (FISF) initiative. The Review addresses the following issues: 1. Institutional Arrangements, 2. Legal and Regulatory Framework, 3. Transparency and Disclosure, 4. Business Practices, 5. Complaints Handling and Dispute Resolution Mechanisms, and 6. Consumer Awareness and Financial Literacy. Volume I summarizes the key findings and recommendations and Volume II assesses each financial sector segment with regard to the Good Practices for Financial Consumer Protection.
From 2004 to 2007, lending to households in Kazakhstan expanded rapidly at 116 percent average annual growth rate and reached 22 percent of GDP, with loans in foreign currency reaching 7 percent of GDP. The share of real estate lending doubled between 2004 and 2007, amounting to 30 percent of GDP at end-2007.Following the global financial crisis and depreciation of the Kazakh tenge, the ratio of nonperforming loans to total loans in housing and mortgage increased from 5 percent in 2008 to 30 percent in 2010. This massive disruption highlighted the need for strong consumer protection and financial capability. Kazakh banks, which had relied extensively on capital market funding, attempted to shrink the credit portfolio and increase domestic deposits with limited success since most adult Kazakhs still have no access to formal financial services, due to low trust and low incomes. The government of Kazakhstan has developed a program to build confidence in the financial sector among investors and consumers. This World Bank’s diagnostic review, conducted in support of the program, is presented in two volumes. Volume I discusses the importance of financial consumer protection, summarizes the Kazakh government`s policy, and sets out the key findings and recommendations of the Review. Volume II provides an assessment of financial consumer protection in the four key segments of the Kazakhstan’s financial sector—banking, securities, insurance, and private pensions.
In 2012, Kyrgyz Republic had significantly lower levels of access to finance compared to most neighboring countries - only 4 percent of the adult population has an account at a formal financial institution compared to the regional average of 44.9. The rural population is especially underserved. Kyrgyz Republic heavily depends on remittances that account for 42 percent of GDP of which 80 percent are inflows. The evolving financial sector is concentrated largely in the remittance flows and related transactions, and provides a good variety of services in a fairly competitive marketplace. At the same time, survey data also indicate a lack of general trust in the financial sector and low levels of financial capability among the Kyrgyz population. While the great untapped potential of the financial services market sets it for rapid deepening and expansion, consumer protection and financial literacy (CPFL) are obviously critical to safeguard sustainable and inclusive growth. This World Bank’s CPFL Review provides a detailed assessment of the institutional, legal and regulatory framework for consumer protection in two segments of Kyrgyzstan's financial sector: banking and microfinance. The review consists of two volumes. Volume I summarizes the key findings and recommendations of the review and Volume II presents a detailed assessment of each financial segment compared to the Good Practices for Financial Consumer Protection.
This Action Plan is based on the World Bank’s Diagnostic Review of Consumer Protection and Financial Capability in Latvia published in April 2010. The Action Plan focuses on the main issues of the Review’s Key Findings and Recommendations, proposing specific actions to be undertaken by Latvian authorities, financial institutions and consumer organizations so that consumer protection is strengthened and made more effective and efficient. Beside the Diagnostic Review itself, the Action Plan draws on the best regulatory and supervisory practices and experiences from around the world. The Action Plan takes into account the current macroeconomic situation in Latvia and focuses primarily on steps with no or low impact on the state finances. When actions with a funding need are recommended, the Action Plan provides an estimate of necessary costs. The Action Plan is divided into five parts that follow the recommendations of the Diagnostic Review: (I) Institutions and Institutional Setup; (II) Disclosure of Information; (III) Business Practices; (IV) Dispute Resolution; (V) Financial Education and Financial Capability. Also available in Latvian (PDF).
The Review provides an assessment of the Latvian consumer protection institutional and legal framework and practices for six segments of the financial sector—banking, non-banking credit institutions, securities, insurance, private pensions and credit reporting systems. The note emphasizes the importance of consumer protection in financial services, describes the Government's policy strategy for financial consumer protection, and provides statistics on the size and growth of the retail financial sector in Latvia. Volume 1 provides an assessment of the Latvian financial sector against the benchmark of Good Practices and Volume 2 sets out the key findings and recommendations of the Review.
Like many Eastern European countries, Lithuania experienced a household credit boom in the long period preceding the global financial crisis. By the end of 2007, mortgage loans in Lithuania reached 20 percent of GDP, issued mostly in foreign currencies, with 59 percent of low-income households holding such loans. Inadequate financial consumer protection left the majority of middle- and low-income borrowers highly vulnerable. The EU Consumer Policy strategy 2007-2013 aims to strengthen consumer protection and financial literacy, emphasizing financial education. Lithuania adopted its own Strategy for Consumer Protection 2007-10 to bridge the gap with the EU standards. Even though Lithuania has already established a basic framework for financial consumer protection, making it comprehensive and effective requires strengthening in many areas. This World Bank’s diagnostic review is presented in two volumes. Volume I gives an overview of Lithuania’s financial sector and its consumer protection landscape and then sets out the key findings and recommendations of the Review. Volume II provides an assessment of the Lithuanian consumer protection framework and practices compared to the template of good practices for three main segments of the financial sector—banking (including mortgage lending), securities, and insurance. In light of the early development of the pension sector, no specialized review was conducted for private pensions.
This Diagnostic Assessment emphasizes the importance of consumer protection in financial services and summarizes the key findings and recommendations of the Review. Volume 1 presents a detailed assessment of each financial segment compared to the Good Practices. It also analyzes and provides recommendations on credit reporting, mobile banking services and private pension funds, and a description of the overall legal and institutional frameworks for financial consumer protection in Malawi. Volume 2 focuses on Key Findings and Recommendations from the Review.
The Mongolian economy has grown very rapidly following the discovery of significant mineral deposits. Large investments in the mining sector have led to increased capital inflows, resulting in cheap external funding for banks and rapid credit expansion. Loans to households increased at the staggering pace of 80% from 2010 to 2011, despite Mongolia’s history of banking crises. Loans to SMEs have increased by some 65% in the same year. Although over 78% of adult Mongolians have accounts at formal financial institutions and over 61% have debit cards – far exceeding the average in the East Asia and Pacific region – in many respects the legal and regulatory framework and enforcement have not kept pace with the expansion of lending. Some important segments of the financial sector, such as securities and insurance, are still lagging due to low consumer awareness and low levels of savings. A number of reforms have been introduced to expand the financial services market but it is clear that consumer protection and financial literacy need to be addressed in a more systematic way. This World Bank’s Diagnostic Review provides a detailed assessment of the institutional, legal and regulatory framework in three segments of the financial sector: banking, securities and insurance. Volume I summarizes the key findings and recommendations of the Review and Volume II presents a detailed assessment of each financial segment compared to the Good Practices for Financial Consumer Protection.
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The Diagnostic Review covers six areas of the financial sector in Mozambique: 1. Institutional Arrangements, 2. Legal and Regulatory Framework, 3. Disclosure, 4. Business Practices, 5. Dispute Resolution Mechanisms, and 6. Financial Education. Volume 1 focuses on key findings and recommendations by providing a detailed assessment of the institutional policy and regulatory framework in two segments of the financial sector: banking and non-bank credit institutions. Volume 2 presents a detailed assessment of each financial segment - banking and non-bank credit institutions - compared to the Good Practices. It also includes annexes that analyze and provide more detailed recommendations on credit reporting and financial education, and a description of the overall legal and institutional frameworks for financial consumer protection in Mozambique.
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This CPFL Review was conducted as a component of Mozambique's Financial Inclusion Support Framework Program (FISF Program). The FISF Program is a World Bank Group (WBG) initiative supported by the Kingdom of the Netherlands and the Bill & Melinda Gates Foundation, which provides technical assistance and capacity building support to countries to help them accelerate the achievement of their financial inclusion commitments and targets. The WBG's Good Practices for Consumer Protection and Financial Literacy/Capability were used as a benchmark for the review. The main objective of a CPFL Review is to assess the legal, regulatory, and institutional frameworks for financial consumer protection in a country, with reference to the Good Practices. The following areas are addressed: (i) Institutional Arrangements, (ii) the Legal and Regulatory framework, (iii) Transparency and Disclosure, (iv) Business Practices, (v) Complaints Handling and Dispute Resolution Mechanisms and (vi) Financial Literacy/Capability. All parts of a financial sector can be considered, including banking, non-bank credit institutions, insurance, securities, private pensions, and credit reporting. Volume I summarizes the key findings and recommendations and Volume II provides a detailed comparison with the World Bank's Good Practices for Financial Consumer Protection.
This Diagnostic Review provides a detailed assessment of the institutional, legal and regulatory framework for consumer protection in five areas of the financial institution in Nicaragua: banking and finance companies, cooperatives, and insurance. The review consists of two volumes and addresses the following issues: 1. the institutional framework for financial consumer protection; 2. disclosure of information to consumers; 3 effective regulation of business practices of financial institutions; 4. a transparent system for financial consumers’ complaints and dispute resolution; and 5. a coordinated program of financial education. Volume I summarizes the key findings and recommendations and Volume II provides comparison with the World Bank's Good Practices for Financial Consumer Protection.
Volume 1: Key Findings and Recommendations - in English or Spanish »
Volume 2: Comparison with Good Practices - in English or Spanish »
The objective of the Diagnostic Review of Financial Consumer Protection in Nigeria is to assess the legal, regulatory, and institutional framework, industry practices and related new initiatives for financial consumer protection (FCP) applicable to the banking, non-bank financial institution (NBFI) and payment sectors and develop prioritized and tailored recommendations aimed at supporting the Central Bank of Nigeria (CBN) in enhancing the FCP framework and its implementation. The assessment is conducted based on the revised and enhanced World Bank Good Practices for Financial Consumer Protection and covers five topics in each of the above-mentioned sectors: i) legal, regulatory, and supervisory framework; ii) disclosure and sales practices; iii) fair treatment and business conduct; iv) data privacy; and v) dispute resolution mechanisms.
The Diagnostic Review for Consumer Protection and Financial Literacy (CPFL) provides a detailed assessment of the institutional, legal, and regulatory framework in four segments of the financial sector: banking, microfinance, securities, and insurance. The review took place in response to a request for World Bank technical assistance in the field of financial consumer protection made by Pakistan’s Ministry of Finance (MoF), the State Bank of Pakistan (SBP), and the Securities and Exchange Commission of Pakistan (SECP). The Review consists of two volumes. Volume I summarizes the key findings and recommendations of the Review and Volume II presents a detailed assessment of each financial segment compared against the Good Practices for Financial Consumer Protection.
This diagnostic review assesses the legal and regulatory framework and industry practices in financial consumer protection (FCP) in the key segments of Papua New Guinea's regulated financial sector: banking, non-bank financial institutions (NBFI), insurance, and payments. Preliminary consideration has also been given to the superannuation sector and securities. Investments and informal sectors were not covered. The report was prepared as part of the PNG Financial Consumer Protection Project, funded by the Department of Foreign Affairs in Australia and the Ministry of Foreign Affairs in New Zealand under the PNG Partnership.
This Diagnostic Review provides a detailed assessment of the institutional, legal and regulatory framework for consumer protection in four sectors of the financial system in Paraguay: banking and finance companies, cooperatives, insurance, and digital financial services. The review consists of two volumes and addresses the following issues: 1. Institutional Arrangements, 2. Legal and Regulatory Framework, 3. Transparency and Disclosure, 4. Business Practices, 5. Complaints Handling and Dispute Resolution Mechanisms, and 6. Consumer Awareness and Financial Education. Volume I summarizes the key findings and recommendations and Volume II provides comparison with the World Bank's Good Practices for Financial Consumer Protection.
The Diagnostic Review assesses the existing financial consumer protection framework by reviewing laws, regulations, and practices in Peru compared to international good practices, and provides recommendations on ways to improve the level of financial consumer protection in Peru. Looking at four segments of the financial sector (banking, microfinance, pensions and insurance), the Diagnostic Review addresses the following issues: 1. Institutional Arrangements, 2. Legal and Regulatory Framework, 3. Disclosure, 4. Business Practices, 5. Dispute Resolution Mechanisms, and 6. Financial Education. Also available in Spanish.
The Philippines has made an impressive progress in consumer protection in the banking sector, as shown by the wide range of laws and of regulatory instruments, their active use and enforcement, and by provision of complaint resolution services. The 2013 Global Survey on Financial Consumer Protection indicated that the Philippines compares well with the other economies and yet there is space for further strengthening of the financial consumer protection framework. In order to improve access to financial services, their usage and quality, and further deepen the financial sector, the Philippines has to design and implement a sound financial consumer protection regime with prudential regulation and supervision. This World Bank’s Diagnostic Review was undertaken in response to a request from the Bangko Sentral ng Philipinas (BSP). It provides a detailed assessment of the consumer protection framework in the banking sector, with a particular focus on debit and credit products provided by BSP regulated banks. The review addresses the following areas: 1. Institutional Arrangements, 2. Legal and Regulatory Framework, 3. Transparency and Disclosure, 4. Business Practices, 5. Complaints Handling and Dispute Resolution Mechanisms, and 6. Consumer Awareness and Financial Literacy. Volume I summarizes the key findings and recommendations and Volume II provides comparison with the World Bank's Good Practices for Financial Consumer Protection.
The Review provides a detailed analysis of the key consumer protection issues in five segments of the financial sector: banking, securities, insurance, private pensions and non-bank credit institutions. Volume 1 of the review comprises of an assessment of the Romanian consumer protection framework and practices compared to the template of good practices. Volume 2 emphasizes on the importance of consumer protection and financial literacy, provides statistics on the size and growth of the retail financial sector in Romania, describes the EU and Romanian strategies on consumer protection and financial literacy, and sets out the key findings and recommendations of the Review.
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Over the last decade, consumer credit in the Russian Federation has expanded from almost nothing to 9.2 percent of GDP in 2008, at 84 percent average annual growth in 2003-2008 year for five years. Yet, the increases have been uneven throughout the Russian population: more than 40 percent are still financially excluded and only 16 percent have bank accounts. A 2008 survey found that Russian consumers had low levels of financial literacy and lacked awareness of their rights as financial consumers. Three-quarters of the survey’s respondents said they would like to receive financial education in order to protect themselves financially and plan for the future. Similar trends of the booming credit markets amid significant gaps in financial literacy around the world have contributed to the global financial crisis of 2008 and emphasized the importance of consumer protection and financial education programs for the long-term health of the financial sector. Responding to a request from Russian authorities, the World Bank conducted a diagnostic review to help Russia design an effective consumer protection and financial literacy framework. This review, presented in two volumes, outlines the key findings and recommendations in Volume I, and analyzes the existing rules and practices in Russia, in comparison with international good practices – in Volume II. Banking, non-bank credit, securities, insurance, private pensions, and credit reporting segments are covered.
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Although the Parliament of Rwanda has passed an impressive array of financial sector laws since 2008, the laws relevant to financial consumer protection are very limited and in some cases overlapping. Consumer protection in Rwandan banking, microfinance, and insurance sectors is fragmented because of insufficiently defined roles and responsibilities among institutions and unclear enforcement capacity. While there are some strong provisions in some areas such as electronic money transfer, electronic transmission, credit information, and market conduct regulation in the insurance industry, many other areas are lagging. Rwandan authorities recognize that a sound financial consumer protection framework is fundamental to improving usage and quality of financial services, access to them, and overall deepening of the financial sector. This World Bank diagnostic review was requested by the National Bank of Rwanda (BNR) in November 2012. Modules on Banking and Microfinance sectors were developed based on publicly available information and data during the World Bank mission in Rwanda, and the review of the Insurance sector was conducted through a desk review using the data obtained from BNR data requests and questionnaires, and the analysis is therefore constrained by it. Volume I of the Review summarizes its key findings and recommendations, and Volume II provides a detailed assessment against the World Bank’s Good Practices on Financial Consumer Protection.
Protection of financial consumers is one of the objectives of the European Union (EU) in developing a single market for financial services that can be sold across borders. The Slovak government also intends to reduce risks for consumers across its financial sector in order to meet the standards of the EU-15 countries. This Technical Note was prepared at the request of the Slovak Ministry of Finance, with the support of the National Bank of Slovakia and other government agencies, ministries, and non-government organizations. It provides a detailed analysis of the key consumer protection issues in each of the five sub-sectors — banking, commercial credit, securities, insurance, and private pensions. EU Directives related to consumer protection and the reports of European financial regulatory and supervisory agencies were used as initial guidelines, along with the sources from the United States, OECD, and UN. The World Bank’s team assembled a set of Good Practices for this Note and in some cases the recommendations for Slovakia go beyond the minimum set by EU legislation. Volume I of the Note discusses the importance of consumer protection in financial services, describes the retail financial sector in Slovakia, and presents the key findings and recommendations of the Note. Volume II provides the analysis of the five sub-sectors, the assessment of Slovakia compared to the draft Good Practices, and the key EU Directives on financial consumer protection.
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The consumer financial services sector in South Africa is among the most sophisticated in the world, yet nearly 40 percent of the population, especially blacks, use no formal financial services. The now ubiquitous mobile phones are dramatically changing the landscape of digital financial services but weak financial literacy and general literacy of the underserved population remain the Achilles Heel. At the same time, weak competition in the South African financial services sector is an issue – just 4 banks control over 80 percent of retail banking and over 90 percent of personal transactions, maintaining rates and fees above competitive levels. The 2010 FinScope survey found that consumer trust was higher in informal financial institutions than in the formal ones such as banks. The South African Government has embarked on a substantive program of improving the financial sector legislation and establishing a full market conduct regulator. Presented in two volumes, this World Bank’s review compares the South African framework for financial consumer protection (FCP) to international practice and provides recommendations to strengthen it. Volume I summarizes South Africa’s FCP policies, describes the recent surveys, and sets out the key findings and recommendations of the Review. Volume II provides an assessment of banking, securities, insurance, and private pensions segments and discusses the key issues in retail payments and remittances and financial education.
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This 2018 diagnostic analyzes provision of consumer transactional accounts and fixed deposits by retail banks in South Africa. The primary aim was to identify potential deficiencies from a fair-treatment perspective in banks’ provision of such accounts and deposits, and how any identified major fair-treatment deficiencies could appropriately be addressed through market conduct regulation, with regard to international good practices and the South African market context. This report sets out the findings of the diagnostic and provides recommendations for regulatory improvements and related measures for consideration by the South African authorities.
Despite the significant expansion of Tajikistan’s financial sector in the past decade, only 2.5 percent of adult Tajiks have an account at a formal financial institution, 0.2 percent have a formal savings account, and only 0.8 percent have paid for health insurance, according to the 2012 Global Findex survey. The World Bank’s 2012 financial capability survey showed that majority of Tajiks lacked knowledge and understanding of basic financial concepts, such as simple interest rates or how inflation affects savings. Tajiks have low confidence and trust in the financial sector - poor governance in the banking sector and weak consumer protection are some of the key factors. The banking and insurance sectors that control over 90% of assets in the financial system are highly concentrated among a few large entities. The microfinance sector is much more competitive and vibrant, managing 9% of the financial system’s assets and growing quickly – it already significantly surpasses the banking sector in the number of borrowers. Tajikistan’s economy heavily depends on remittances that amount to 31 percent of GDP and rarely go into savings. Tajik authorities recognize that weak consumer protection and very low financial literacy are critical structural impediments to the further development of the financial sector and Tajikistan’s economy as a whole. This World Bank’s diagnostic review aims to assist Tajikistan’s reform efforts and analyzes the institutional, legal, and regulatory framework in the three financial sector segments: banking, microfinance, and insurance. Volume I of the review outlines its key findings and recommendations and Volume II provides a detailed analysis of the covered financial sector segments in comparison with the World Bank’s Good Practices for Financial Consumer Protection.
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In 2011, only 17.3% of adults in Tanzania had an account at a formal financial institution and 56% did not have any access to financial services. Most of the population lives in rural areas with very low incomes and poor infrastructure, and women are especially disadvantaged. Such limited access to formal financial services also inhibits financial literacy – awareness of benefits and risks, and how to take advantage of opportunities. Despite significant challenges, all institutional elements of the formal financial sector in Tanzania are in place, helping its gradual expansion, and in some segments technology is driving rapid growth – particularly in mobile and electronic payments. Still, gaps and weaknesses in financial consumer protection and financial education remain some of the main obstacles to sustainability and greater trust in the financial sector. This Diagnostic Review was requested by the Ministry of Finance of Tanzania in November 2012. It provides a detailed assessment of Tanzania’s institutional, legal and regulatory framework against the World Bank’s Good Practices for Financial Consumer Protection. Three segments of the financial sector have been analyzed: banking, microfinance, and pensions. Insurance and securities segments will be considered at a later stage. Volume I of the Review summarizes the key findings and recommendations and Volume II presents a detailed assessment of each financial segment compared to the Good Practices.
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Eight years of strong economic growth in Ukraine in 2000-2008, at an average of seven percent per year, ended with a sharp 15 percent decline in 2009. The national currency plummeted and the banking sector nearly collapsed, with non-performing loans increasing from 2.3 percent to 11.2 percent of total loans in 2008-2010. According to the 2010 USAID/FINREP financial literacy survey, 39% of adult Ukrainians are still unbanked and nearly half prefer holding savings in cash. Only 15 percent of consumers trust banks and just 6 percent trust investment funds or private pension funds. Only 17 percent believe in a fair resolution in a dispute with a financial institution. The Ukrainian authorities recognize that the financial system needs to be made more resilient to future crises and thus requires a substantial redesign of the legal and regulatory framework of consumer protection and market conduct in financial services. This World Bank’s diagnostic review aims to help Ukraine design a 5-year strategy to strengthen financial consumer protection and financial education as the fundamentals for sustainable growth and deepening of the financial sector. The review is presented in two volumes. Volume I contains the main findings and recommendations of the review, and Volume II provides a detailed assessment of Ukraine’s compliance with the international best practices summarized in the World Bank’s Good Practices for Financial Consumer Protection.
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In 2011, only 21.4% of Vietnamese adults had an account at a formal financial institution, and only 36.9% of all borrowers used a formal lender – both indicators are well below the regional averages in the East Asia and Pacific. The formal financial sector in Vietnam is dominated by banks; however, retail lending is still rather underdeveloped due to often flawed lending practices and low levels of financial literacy among the population. Vietnamese authorities and the civil society have demonstrated a deep commitment to financial consumer protection by continuous dialogue and persistent legislative activities, and yet, much still needs to be achieved. The legal and regulatory framework for consumer protection in the financial sector, and related supervisory arrangements, are at a nascent stage of development. This World Bank’s Diagnostic Review was conducted in response to a request from the State Bank of the Socialist Republic of Vietnam. The Banking, Non-Bank Credit Institutions, Securities, Insurance, and Credit Reporting sectors were considered as well as Financial Literacy Strategies and Programs. The Review was conducted by reference to the World Bank's Good Practices for Financial Consumer Protection and provides a detailed assessment of the institutional, legal and regulatory framework for financial consumer protection. Volume I of the Review summarizes the key findings and recommendations and Volume II provides a detailed comparison with the Good Practices.
The Diagnostic Review of Consumer Protection and Financial Literacy in Zambia was conducted at the request of the Bank of Zambia (BoZ) and covers: i) banking; ii) non-bank financial institutions; iii) insurance; iv) pensions; and v) securities. Volume 1 of the Review provides a detailed analysis of the key consumer protection issues in Zambia for each of the five sub-sectors whereas Volume 2 compares the existing legal and regulatory framework, institutional arrangements, and market practices to good practices and provide recommendations to enhance financial consumer protection and financial literacy in Zambia.
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In the last decade, Zimbabwe’s financial sector survived the periods of hyperinflation and the collapse of the national currency that led to the adoption of a multi-currency system in early 2009. Consequently, financial sector activity in Zimbabwe has shrunk by more than 50 percent in many segments. In 2015, the financial sector is dominated by the banking segment that is generally stable but faces major systemic challenges: low liquidity, low capitalization, high cost of funds with low domestic savings and expensive external borrowing. High credit risks increase the reluctance to lend. At the same time, the technology-driven segments are growing rapidly but regulatory gaps pose significant systemic and entity-level risks. In such circumstances, the Zimbabwe authorities recognize the urgency of establishing a sound financial consumer protection regime and promoting financial literacy. This World Bank’s diagnostic review was requested by the Reserve Bank of Zimbabwe with support of the national government and regulatory bodies. It provides analysis of the legal and regulatory framework in the banking, digital financial services, non-bank credit institutions, insurance, securities, private pensions, and credit reporting segments. Four consumer focus groups were also conducted on financial capability issues. Volume I of the Review summarizes the key findings and recommendations, and Volume II provides comparison with the Good Practices for Financial Consumer Protection.