Financial consumer protection encompasses the laws, regulations, and institutional arrangements that safeguard consumers in the financial marketplace. This section offers resources developed by our staff and partners that include technical guidance, country reports, and tools for policymakers, regulators, development partners and other experts.
Financial products and services play a significant role in enabling consumers to build their resilience, seize opportunities, and meet essential needs. However, consumers also face a range of risks when engaging with such products and services. For financial consumer protection (FCP) to be helpful in mitigating such risks, effective FCP supervision, in addition to regulation, is essential. However, authorities’ supervisory resources are always limited. The reality of limited resources is typically even more acute in emerging markets and developing economies. Authorities around the world are therefore increasingly focusing on implementing ‘risk-based’ supervision (RBS) for FCP. RBS is intended to focus limited resources on the most important issues within an authority’s supervisory scope, in a forward-looking and proactive manner. This Note provides guidance on key issues and decisions that authorities should consider when establishing FCP RBS.
Fintech is increasingly recognized as a key enabler for financial sectors worldwide, enabling more efficient and competitive financial markets while expanding access to finance for traditionally underserved consumers. A critical challenge for policy makers is to harness the benefits and opportunities of fintech while managing its risks, including for consumers. The COVID-19 pandemic further accelerated the widespread transition of consumers to fintech and digital financial services, highlighting their significant benefits while also demonstrating how risks to consumers can increase in times of crisis and economic stress. This paper (1) identifies a range of consumer risks posed by fintech, focusing on four key fintech products (digital microcredit, peer-to-peer lending, investment-based crowdfunding, and e-money) and (2) discusses consumer protection regulatory approaches emerging internationally for policy makers to consider when developing regulatory policy to target such risks. Examples of regulatory approaches are drawn from country examples and international literature. The paper also discusses a range of implementation considerations.
Disclosure and transparency are cornerstones of financial consumer protection and are key drivers of trust in the financial system. A key facts statement (KFS) is an important tool to improve transparency and disclosure of information for financial products through the adoption of a standardized format that is designed to convey information in a simple and easy-to-understand manner. The design of a KFS is central to its success. Testing a KFS is an important part of the design process and ensures that a KFS is designed in a way that reduces information asymmetry between consumers and providers of financial services most effectively. The purpose of rigorously testing a KFS is to assess how different versions of a KFS influence the understanding of product terms and conditions, as well as the consumer decision-making process. KFS testing can identify and recommend improvements to the KFS. It does so by testing: (1) participants’ design and content preferences; (2) the information on which they typically focus; (3) questions that arise with regard to the content and design; (4) the amount of information that participants can comprehend and process; and (5) how different presentations of information alter participants’ decision-making. This report recommends prioritizing focus groups as a tool that can address the majority of KFS-testing needs.
Around the world, financial sector supervisors are experiencing a profound shift to data-driven supervision enabled by the next wave of technology and data solutions. While technology and data are not new to financial oversight, their specific application to financial consumer protection and market conduct supervision has become more widespread and sophisticated in recent years. Expanding on the World Bank’s 2018 note on supervisory technology, or suptech, this technical note catalogues a range of specific solutions that financial authorities are deploying to help increase the efficiency and effectiveness of market conduct supervision. The note identifies four categories of suptech solutions (regulatory reporting, collection and processing of complaints data, non-traditional market monitoring, document and business analysis) and provides concrete examples of 18 different suptech solutions for market conduct supervision, drawing from the experiences of 14 financial sector authorities worldwide. The note also discusses implementation considerations and enablers of successful suptech adoption commonly experienced across countries.
Core to an effective financial consumer protection framework is an accessible and efficient recourse mechanism that allows consumers both to know and to assert their rights to have their complaints addressed and resolved in a transparent and just way within a reasonable timeframe. Complaints handling mechanisms are especially important for low-income and vulnerable financial consumers, to whom timely and effective recourse processes can have a decisive influence over their trust in their financial service provider (FSP) and in the financial sector in general. Increased trust contributes to consumers' uptake and sustained usage of financial services and, consequently, their economic livelihoods.
This note discusses emerging international approaches for regulating design and distribution of retail banking products. Such products include deposit, credit, and payment products, being the products that new financial consumers typically acquire first. Policy makers are finding that financial consumer protection measures implemented to date, such as disclosure requirements, while still important, are insufficient to protect consumers against all key risks. Anticipating new or changing risks to consumers has also become more difficult for regulators given rapid financial sector innovation.
Since the 2012 edition (available below), international guidance and country practices regarding financial consumer protection have substantially evolved. The 2017 Good Practices is a comprehensive reference and assessment tool for policymakers that consolidates the latest research, international guidance, and country examples. A thorough update of the previous edition, this guide emphasizes implementation aspects and expands upon priority areas such as supervisory techniques, effective disclosure, and digital finance.
This report presents the main findings of the 2017 Global Financial Inclusion & Consumer Protection (FICP) Survey. The 2017 Global FICP Survey tracks the prevalence of key policy, legal, regulatory, and supervisory efforts to advance financial inclusion and financial consumer protection. Financial sector authorities in 124 jurisdictions - representing 141 economies and more than 90 percent of the world’s unbanked adult population - responded to the 2017 Global FICP Survey. See also: 2013 Global CPFL Survey (available below).
Effective market conduct supervision is critical to ensuring that financial consumers are protected from unfair business practices and provided with clear information. This discussion note examines the use of Suptech (supervisory technology) solutions to improve market conduct supervision. It also provides case studies of Suptech applications in the U.S, Lithuania, and Brazil, and highlights the risks and challenges that may arise with Suptech.
New sources of data and new ways to process data have contributed to an ongoing expansion in the availability of digital financial services. Such data can be used to design and market customer-centric products, create credit scores for consumers with limited credit histories, meet and facilitate know-your-customer requirements, and minimize the risk of fraud. Yet a great variety of personal information may be processed in this context. This discussion note provides an overview of benefits and risks arising from the use of new types of data and identifies areas for further research.
This technical note provides practical guidance to policy makers seeking to develop key facts statements (KFSs) for consumer credit products. Misleading or incomplete information on fees and risks can result in consumers choosing products not well-suited to their needs, potentially harmful to consumer welfare. KFSs provide key information on terms, conditions, fees, and total costs, in a clear standardized format. The note shares the key principles, international good practices, and lessons learned in developing KFSs that can help achieve better consumer comprehension.
