Global Survey on Consumer Protection and Financial Literacy

Preliminary Results

June 14, 2013Moscow

Nataliya Mylenko World Bank

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Who? Financial regulators (central banks, bank supervisory agencies, financial consumer protection and market conduct regulators where exist)

What? Financial consumer protection and financial literacy framework and implementation arrangements for deposit and credit services.

Why? Review of trends and benchmarking practices in financial consumer protection around the world to assist countries in policy reforms and to stimulate the debate on this topic.

Global Survey on Consumer Protection and Financial Literacy

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Topics Covered:

• Legal framework (applicable laws)• Institutional arrangements (institutional structure and functions and

powers of relevant authorities)• Disclosure Requirements (account opening, periodic statements, and

other)• Fair Treatment (deceptive advertising, bundling, abusive collection

practices, etc.)• Responsible Lending (ensuring affordability and avoiding

overindebtedness)• Dispute Resolution and Recourse (set-up, timeliness, accessibility, type

of complaints)

1CONSUMER PROTECTION

FINANCIAL LITERACY2• Activities implemented in relation to financial education / literacy.• Responsibility and institutional arrangements to enforce financial

education / literacy.

Global Survey on Consumer Protection and Financial Literacy

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Process and Preliminary Results

Next Steps:

Respondents:So far, 107 countries responded, including all G20 countries (except India).

• Data analysis and follow up ongoing• Final results expected by September 2013

Global Survey on Consumer Protection and Financial Literacy

Most countries have a legal framework in place, and the number of countries with a legal framework for CPFL increased between 2010 and 2013. Many countries with existing laws also passed amendment or issued new regulations

5

48

68

86

56

68

91

0 20 40 60 80 100

Consumer protection law with a reference to financial services or a separate financial

consumer protection legislation

General consumer protection law

Regulations on financial consumer protection within financial legislation

framework

2013

2010

Note: Global Survey on Financial Consumer Protection. Preliminary results as of May 2013. Based on data for 98 economies with data for 2010 and 2013

Legal framework for CPFL is diffused – in more 80% of economies a combination of consumer protection laws and financial legislation applies

6

Note: Global Survey on Financial Consumer Protection. Preliminary results as of May 2013. Based on data for 105 economies with data for 2013

88

31

21

34

3

General law, explicit law or both (only)

Regulations within financial framwork (only)

General law and regulations within financial frameworkExplicit law and regulations within financial frameworkGeneral law, explicit law AND regulations within financial frameworkNone

Mirroring diffused legal framework, in most countries multiple regulatory and supervisory agencies have a responsibility for financial consumer protection. Institutional framework is determined by existing bank supervision and overall consumer protection institutional framework

7

19

11

44

17

4 4 2

Integrated single agency only

Integrated single agency & general CP regulatorIntegrated multiple agency only

Integrated multiple agency & general CP regulatorGeneral CP regulator, only

Twin Peaks, only

Other

Note: Global Survey on Financial Consumer Protection. Preliminary results as of May 2013. Based on data for 101 economies with data for 2013

More countries assigned a legal responsibility for financial consumer protection to financial supervisors and created dedicated teams or units between 2010 and 2013

8

64

87

45

69

2010

2013 Agency has a dedicated unit for consumer protection

Agency has a responsibility for financial consumer protection

Note: Global Survey on Financial Consumer Protection. Preliminary results as of May 2013. Based on data for 98 economies with data for 2010 and 2013

More than half of the economies with a dedicated team for financial consumer protection, have it separately from prudential supervision

9

25

39

7

19

As part of prudential supervision only

Separate from prudential supervision only

Both within and separately from prudential supervision

No unit

Note: Global Survey on Financial Consumer Protection. Preliminary results as of May 2013. Based on data for 90 economies responding to this question in 2013

Responsible agencies broadened the range of compliance monitoring tools between 2010 and 2013, especially in terms of collecting statistics on the number of complaints.

10

Note: Global Survey on Financial Consumer Protection. Preliminary results as of May 2013. Based on data for 98 economies with data for 2010 and 2013

26

28

45

48

49

70

14

16

34

23

46

63

0 20 40 60 80

Mystery shopping

Conduct interviews

Operate a hotline

Collect complaints stats from Fis

Monitor FI advertising, websites

Onsite inspections

2010

2013

Agencies with dedicated units or teams use a broader range compliance tools beyond onsite inspections

11

18%

12%

29%

18%

29%

18%

53%

71%

35%

38%

45%

62%

64%

67%

77%

87%

0% 20% 40% 60% 80% 100%

Mystery shopping

Conduct interviews

Publish rates and fees reported …

Operate a hotline

Monitor FI advertising, websites

Collect complaints stats from Fis

Offsite

Onsite inspections

CP unit exists

No unit

Note: Global Survey on Financial Consumer Protection. Preliminary results as of May 2013. Based on data for 87 economies with data for this question 2013

In most economies responsible agencies have authority to monitor complaints, but not to take direct actions to resolve complaints

12

27

46

56

61

77

80

0 20 40 60 80 100

Make binding decisions

Assist directly in resolving complaints

Analyse/publish complaints stats

Assist indirectly in resolving complaints

Register complaints

Respond to complaints

Note: Global Survey on Financial Consumer Protection. Preliminary results as of May 2013. Based on data for 90 economies with data for this question 2013

Most economies have a third party dispute resolution mechanism in place.

13

20

18

30

68

0 20 40 60 80

No dispute resolution system

General ombudsman

Mediation /Arbitration service

Financial Ombudsman

12

15

30

10 Industry based

Independent statutory body

Within supervisory agency

Multiple

Supervisory agencies operate an ombudsman-like service in a third of the economies with financial ombudsman.

Note: Global Survey on Financial Consumer Protection. Preliminary results as of May 2013. Based on data for 104 economies.

Resolution mechanisms

Responsible lending. Most countries indicated that they have some form of responsible lending provisions (78 out of 104). There are 40 countries with explicit limits such as LTV or DSR, double the number in 2010

14

6420

20

No explicit limit

Explicit limit 2010

Explicit limit 2013

Note: Global Survey on Financial Consumer Protection. Preliminary results as of May 2013. Based on data for 104 economies.

Financial literacy. Most financial regulators (76%) are involved in the efforts to improve financial literacy.

15

59%17%

24%Responsible for financial literacy

No explicit authority, but involved in financial literacy

Not involved in financial literacy

Note: Global Survey on Financial Consumer Protection. Preliminary results as of May 2013. Based on data for 104 economies.

Most regulators are involved in the development of training materials and delivering training directly. This also includes various initiatives to improve general awareness of the public on financial sector issues

16

33

36

47

59

61

0 20 40 60 80

Issue guidelines on FL to Fis

Conduct survey of financial literacy

Develop a stategy for financial literacy

Provide training directly

Develop trainng materials

Note: Global Survey on Financial Consumer Protection. Preliminary results as of May 2013. Based on data for 104 economies.

Summary and next steps

• Financial regulators play an important role in implementing financial consumer protection laws and regulations

• There is a significant variation among countries in terms of the approach for regulatory and institutional structure for financial consumer protection

• Financial consumer protection and responsible finance is an active area of reform and further assessment of the effectiveness of various regulatory measures is necessary

• Most financial regulators are involved in delivering financial literacy programs and formulating financial literacy and education strategies. There is a significant variation in the approach taken.

• Final results are expected in September 2013

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THANK YOU!

For more information:www.worldbank.org/financialinclusion

responsiblefinance.worldbank.org