4 problems with (and 5 answers to) financial consumer protection in Kenya

Michael Okumu from CI member organisation YEN,Kenya, advises consumers to educate themselves about a bank’s products and services before they sign up.

Ignorance is truly a fatal disease that increases consumers’ vulnerability. Uneducated consumers buy products and services that do not meet their expectations and then quietly, or never, complain.

On 15 March, the world celebrated World Consumer Rights Day, a day dedicated to highlighting the importance of consumers exercising their rights and responsibilities.

In Kenya, consumer protection is still non-existent with very few mechanisms of redress and a pervasive lack of knowledge of one’s rights as a consumer. This can be compounded by gaps in service delivery by dishonest service providers.

And banks are no exception. Often, consumers don’t get the best deal from a bank and do not respond effectively when this happens.

Here are some of the biggest problems for financial consumers in Africa:

1. Accessibility

Accessibility is a real problem in Africa as consumers often have to travel long distances from rural areas to get a specific service. The introduction of deposit-taking shops has eased the problem slightly but they do not address all the issues relating to accessibility.

2. Lack of ATMs

ATMs are not available everywhere, denying people access to their money and causing consumers to have to pay additional fees for drawing money from ATMs other than those their bank provides. Banks need to be more innovative to provide affordable services for all, everywhere.

3. Hidden fees

Hidden fees are another problem. Taking out loans or enjoying certain services requires close scrutiny by consumers because, in the long run, the high interest rates add up and many consumers are unaware of this at the onset.

4. Low interest

Low interest on savings is another problem still. Some consumers will question whether it is worth saving in a bank if the interest rates are so minimal. Mobile phone services provide an alternative to saving money in a bank as there are no ledger fees, account opening fees, balance statement fees, etc, but there is also no interest.

Consumers need to empower themselves by seeking information and education on their rights and responsibilities. Consumers International is helping consumer groups in East Africa educate consumers about financial services and products with its financial education counselling handbook.

Here are some tips on how to protect yourself:

1. Court your bank

When choosing a bank, consumers need to have a ‘courtship’ period. Gathering background information about a bank is very important because it gives you an idea about the bank’s character in terms of stability, reputation, social responsibility and potential. All of these are key for consumers not only to make good choices but to protect themselves from any eventualities.

2. Evaluate offers closely

Consumers need to keenly evaluate exciting offers and take them up only if they suit them. Consulting with friends or financial advisors would be an added advantage in ensuring that you pick the best financial product or service.

3. Avoid banks you aren’t sure about

It is also prudent to avoid adversely-named banks that could have evaded taxes or banks with a high turnover of staff as this could signal board wrangles, theft or mistreated staff.

4. Avoid downsizing banks

Also avoid banks that could be reducing their networks. They often do not warn their customers that they are doing this.

5. Ask about the complaints desk

A good bank should have a receptive complaints desk with an elaborate mechanism of redress that is accessible and responsive.

Consumers in Kenya should exercise their rights, keeping in mind that the new constitution provides protection as we wait for the Consumer Protection Bill to be passed which will further harness consumer rights and responsibilities.

And remember—if your bank only looks good in the advertising, then look for an alternative rather than ending up in a relationship that doesn’t work.

Lundi, 30 avril 2012. Quatre problèmes avec (et cinq réponses à la) protection des consommateurs en matière financière au Kenya

Mettre l'accent sur... La protection des consommateurs, la crise financière, des services financiers et  la Journée mondiale des droits des consommateurs.

Michael Okumu de l'organisation membre de CI Youth Education Network (YEN), in Kenya, conseille aux consommateurs de bien se renseigner sur les produits et les services d'une banque avant qu’ils ne se fassent inscrire. 

L'ignorance est vraiment une maladie mortelle qui augmente la vulnérabilité des consommateurs. Les consommateurs non-informés  achètent des produits et services qui ne répondent pas  à leurs expectations  et  tranquillement, ou jamais, ne vont porter plaintes.

Le 15 mars, le monde a célébré de la Journée mondiale des droits des consommateurs (JMDC), une journée consacrée à souligner l'importance pour les consommateurs d’exercer leurs droits et responsabilités.

Au Kenya, la protection des consommateurs est encore inexistante avec très peu de mécanismes de recours et l'absence généralisée de la connaissance de ses droits comme étant un consommateur. Cela peut être aggravé par les lacunes de la prestation des services offertes par  les fournisseurs malhonnêtes.  Et les banques ne font pas d’exception. Souvent, les consommateurs ne reçoivent pas la  meilleure concession auprès d'une banque et ces dernières ne répondent pas efficacement lorsque le consommateur se plaint.

Voici quelques-uns des plus grands problèmes des consommateurs financiers en Afrique :

Accessibilité 

L'accessibilité est un problème réel en Afrique, où les consommateurs doivent souvent parcourir de longues distances des zones rurales pour obtenir un service quelconque. L'introduction des magasins dépôts a assoupli un peu ce  problème mais ils n’ont pas résolus  tous les problèmes relatifs à l'accessibilité. 

 Manque de guichets automatiques  (ATMs)

Guichets automatiques ne sont pas disponibles partout, ainsi refusant  aux consommateurs l’accès à leur argent et ainsi causant les consommateurs d'avoir à payer des taxes additionnelles pour retirer argent de guichets automatiques d’autres banques.  Les banques devront être plus innovatrices pour fournir des services abordables pour tous et partout.

Frais cachés

Frais cachés constituent  un autre grand problème pour le consommateur africain. Prendre des emprunts ou de profiter de certains services spéciales,  requiert prendre des précautions minutieuses par les consommateurs parce que, à long terme, les taux d'intérêt élevés s’additionnent  et beaucoup de consommateurs n'étaient  pas conscients de cela au début. 

Taux d’intérêt très bas

Intérêt sur l'épargne est un autre problème confronté  par les consommateurs. Certains consommateurs remettent  en question s’il vaut la peine d’épargner dans une banque, si le taux d'intérêt est donc si minime.  Même si l’introduction des services par téléphone mobile offrent une alternative pour économiser de l'argent plutôt que d’ouvrir un compte en banque (i.e. il n'y frais d'ouverture de compte, aucun frais de comptabilité, frais de déclaration de solde), il n’existe aucun intérêt avec ce service.

Les consommateurs devront faire tous par eux-mêmes pour rassembler toute information et éducation sur leurs droits et leurs responsabilités.  C’est dans ce cadre que Consumers International  (CI) a aidé des groupes de consommateurs en Afrique de l'Est en leurs éduquant sur les produits et services financiers et  ainsi a  produit un manuel sur l’éducation financière. 

Voici quelques conseils sur comment vous protéger :

Fait la cour de votre banque

Lors du choix d'une banque, les consommateurs doivent avoir une période de « parade nuptiale ». Collecter  le plus d’informations possible sur une banque estune exercice  très importante car ça vous donnera une idée sur le profil de cette banque en termes de stabilité, de réputation, de responsabilité sociale et de sa capacité. Tous cette information est  essentielle pour les consommateurs non seulement pour faire de bons choix, mais aussi pour se protéger contre toutes les éventualités. 

Évaluer des offres excitantes minutieusement

Les consommateurs doivent minutieusement évaluer des offres intéressantes et les prendre uniquement si elles leur conviennent. Consultation avec des amis ou de conseillers financiers serait un avantage supplémentaire pour s'assurer que vous choisissez le meilleur produit ou service.

Éviter les banques dont vous n'êtes pas sûr

 Il est également prudent d'éviter les banques nommé négatif que pourraient avoir éludé les taxes dans le passe, ou les banques avec un renouvellement  élevé de personnel comme cela pourrait signaler leurs querelles avec le Conseil d’administration (board), de vol ou de mal-traitement du personnel.

Éviter les banques qui sont en période de réduction des effectifs

Aussi éviter les banques qui seraient en train de réduire leurs réseaux. Souvent ils préfèrent de ne pas avertir leurs clients. 

S’informer sur le bureau des plaintes

Une bonne banque devrait avoir un bureau de plaintes réceptif avec un mécanisme complexe de redressement qui est accessible et responsive. 

Les consommateurs au Kenya doivent exercer leurs droits, en gardant à l'esprit que la nouvelle constitution fournit une protection, en attendant que la loi sur la protection des  consommateurs  soit  passée qui exploitera davantage les responsabilités et les droits des consommateurs. 

Et n'oubliez pas, si votre banque seulement semble bonne dans la publicité, il faut chercher une alternative plutôt que de se retrouver dans une relation qui ne fonctionne pas.

Global economic crisis deniers?

CI’s Jeremy Malcolm reports from the United Nations Conference on Trade and Development where the world’s leading industrialised economies are attempting to re-write history.

The financial crisis that struck in 2008 ushered in the first contraction in the global economy since the 1930s. Its effects spread very rapidly and widely. The world’s poorest economies were not spared. Despite the policy efforts of leading economies, both developed and developing, the global economy remains fragile.
 
None of the above seems very controversial, does it?  The paragraph could well have been taken from Wikipedia or from a report in a respected newspaper or magazine.
 
As a matter of fact, it is an almost exact quotation from the draft negotiating text for the 13th Quadrennial Conference of the United Nations Conference on Trade and Development (UNCTAD) in Doha, Qatar this week.
 
Yet UN members can't agree on it. In fact, shockingly, the world's leading industrialised economies want to erase each and every reference to the global economic and financial crisis from the text - as if making believe that it never happened.
 
The same rich countries are also refusing to agree to include references to:

• Energy price volatility and access to renewable energy;
• Access to medicine at affordable prices;
• Environmentally-compatible patterns of production and consumption that safeguard the biosphere;
• Adequate regulation and supervision of financial markets; and
• That foreign investors should comply with the domestic legislative framework of host countries, such as consumer protection law.

Perhaps even worse, they are seeking to restrict UNCTAD, with its unique development perspective, from dealing with these issues, claiming that such issues should instead be reserved for the pro-globalisation organs such as the World Bank, the International Monetary Fund and the Organisation for Economic Co-operation and Development.
 
This prompted an unprecedented open letter of protest from 49 former UNCTAD staff members earlier this month, and has created an atmosphere of high tension in the intergovernmental negotiations which are ongoing this week.
 
In partnership with other civil society groups from around the world, CI is in Doha to fight back against this shameful intransigence of the world's rich economies.
 
We are doing this in two ways: first, by talking to the delegates themselves, and pointing out how their denial of the world's food, energy, climate, financial and development crises is a slap in the face of the world's most disadvantaged consumers.
 
Second, resigned to the fact that the intergovernmental text may end up as a weak compromise, civil society groups including CI have drafted their own Civil Society Declaration and are presenting it this week.
 
In that declaration, CI confronts head-on the issues that are too difficult for governments to face. The declaration includes the following paragraph on the topic of consumer protection (for which UNCTAD is the lead agency within the UN system):
 
UNCTAD should promote consumer rights as part of its mandate over competition and consumer protection issues. Consumers have rights to the satisfaction of basic needs, to safety, to choice, to redress, to information, to consumer education, to representation, and to a healthy environment. It should lead the revision of the United Nations Guidelines for Consumer Protection in light of recent trends including the increased exposure of consumers to new products and marketing strategies, increased cross-border commerce in consumer products, and technological changes that affect consumers. 

UNCTAD and CI have a long record of working together to advance the rights of consumers, and this will continue despite the attacks from rich countries that UNCTAD is currently enduring.

 

Its mission to maximise the trade, investment and development opportunities of poor countries fits in well with CI's mission to advance the rights of consumers worldwide. In particular, we will be participating in an UNCTAD meeting to discuss the revision of the UN Guidelines for Consumer Protection this July.

 

To find out the ultimate outcome of the negotiations in Doha, or for more information on CI's work at UNCTAD, you can follow CI delegate Jeremy Malcolm's private Twitter account, @qirtaiba, or email him at jeremy@ciroap.org.

The powerful junk food lobby still faces a tough fight

CI’s Food Safety and Nutrition Programme Officer Anna Glayzer looks at the countries doing the best work in controlling food marketing to children and what it will take to motivate the rest.

Speaking at the European Network on Reducing Marketing Pressure on Children in Copenhagen last month gave me the opportunity to take stock of the efforts being made around the world to tackle junk food marketing.

Our member organisations are doing some fantastic work all over the world, most recently in Chinese Taipei, Fiji, Germany, India, Malaysia, Mexico, Netherlands, South Africa and the UK.

The breadth of activity shows that, not only is the targeting of children by advertisers of high fat, salt and sugar foods an almost universal health threat, but also that consumer groups, along with other NGOs, are a vital part of efforts to protect our most vulnerable consumers.

But is our campaigning really making a difference? Is it actually pushing governments and companies to act?

A few national governments around the world are taking encouraging steps towards tighter controls on food marketing. For example, the Fijian Ministry of Health is currently drafting regulations. Also, the Broadcasting Authority of Ireland has drafted a code which includes applying restrictions to advertising aired during programmes for which more than 50% of the audience is younger than 18.

This code has prompted complaints from the Irish Breakfast Cereal Association, who lamented that it would result in the banning of ads for 75% of breakfast cereals. Given the nutritional quality of many children’s cereals, I would take this as an encouraging sign.

Meanwhile, in Norway the government is developing new legal restrictions on food marketing, including the development of a rigorous new nutrient profiling model. Both the Irish code and the Norwegian legal restrictions are due to come into force on 1 January 2013.

At the international level there is also progress. The World Health Organization (WHO) has worked extensively on marketing to children. It has just published A Framework for Implementing the Set of Recommendations on the Marketing of Food and Non-alcoholic Beverages to Children.

As the title suggests, the Framework is intended to assist national governments in implementing the recommendations agreed by the World Health Assembly in 2010, in which governments were urged to act to protect children.

The WHO is also producing a manual for governments to use to develop a nutrient profiling model suitable for appliction to restrictions on marketing. Similarly, CI’s Manual on Monitoring Food Marketing is suitable for both governments and NGOs to use.

There is no shortage of tools on offer to help governments take simple, cost-effective, preventative measures on public health. The problem is that not enough governments are willing to commit to tackling non-communicable diseases (NCDs). This was borne out by last September’s much anticipated UN High-Level Meeting on NCDs, which resulted in a disappointing output. A political declaration was produced but no time-bound targets were agreed. The voluntary targets since proposed by the WHO look set to be watered down further following consultation with member states.

As Jane Landon of the UK’s National Heart Forum pointed out whilst speaking in Copenhagen, the food industry has ‘wriggle room’ when it comes to re-formulating high fat, salt and sugar food or front-of-pack labelling. It cannot, however, be expected to co-operate meaningfully with measures for which the ultimate goal is: sell less processed food.

The only really effective solution therefore is legislation. The onus, for the time being, is on national governments to be a bit more like Norway.

Mexico and the G20 leadership: So far so good

CI Head of Campaigns Justin Macmullan looks at two things the new leadership of the G20 is getting right in financial consumer protection

It was 18 months ago that G20 leaders meeting in Seoul, South Korea, respondedto CI’s call for international action to support financial consumer protection.

For much of 2011, whilst the French government held the G20 presidency, this new area of work received enthusiastic support from Christine Lagarde, the former French finance minister.

Now that the G20 presidency has moved to the Mexican government, what can financial consumers and their representatives expect?

Initial impressions are certainly good. On two of the key issues identified by CI, the Mexican government is saying the right things.

First, in line with the G20 declaration from Cannes last year, the Mexican government has called for the development of a set of guidelines for the implementation of the OECD high level principles on financial consumer protection.

When these principles were adopted by the G20 last November, CI was critical of the weak language that was used – though many of the issues covered were the right ones. These guidelines offer an opportunity to add some of the detail and clarity that was missing in the principles themselves.

The Mexican government has also given strong support to the development of an international organisation for national financial consumer protection agencies (FinCoNet). This was another key CI demand and one that was taken up by the Financial Stability Board (FSB) in their report on consumer finance protection.

Given the impact that failures in consumer banking and credit had on economies around the world, many would say it is remarkable that such an organisation doesn’t already exist.

So overall, the Mexican agenda looks about right. The concern of course is what the final content of the guidelines will be, how effective FinCoNet will be in delivering its mandate and the speed with which this work will be delivered.

On the content of the guidelines and FinCoNet’s effectiveness we will have to see, but CI will certainly continue to lobby for the strongest possible guidelines and support FinCoNet’s development into an effective international agency.

However, the wheels of international negotiation certainly turn slowly. The Mexican government has suggested a two-year timetable for the development of the guidelines.

In their Cannes declaration, the G20 committed to “pursue the full application of these principles in our jurisdictions and ask[ed] the FSB and OECD along with other relevant bodies, to report on progress on their implementation to the upcoming Summits.”

With this timetable, it is unlikely that any country will have their financial consumer protection reviewed before 2014 – a full four years after the G20 first agreed to address this issue. Is this just the price that has to be paid for international consensus?

In 2008, when the world was rocked by the biggest financial crisis in a generation, there was a real sense of urgency and determination that this sector should be reformed. Four years on, it is still a work in progress. 

Put your question to the CI President

On 19 April, 17.30 GMT: CI President Jim Guest will be online with World Bank Live to take questions on financial consumer protection

As Rio+20 approaches, governments weigh the benefits of two paths to sustainability

CI’s Luis Flores, who coordinates our role as Organising Partner for NGOs within the Rio+20 process, looks at potential outcomes of the complex debate on sustainable consumption

There is general agreement among governments of the urgent need to address the current unsustainable patterns of development. However, as the international negotiation processcontinues towards the Rio+20 Earth Summit, there is little agreement on how to do it.

In terms of sustainable consumption and production (SCP) – the issues that most concern consumer rights groups – the Rio+20 negotiations are currently considering two approaches, but neither of them is sufficiently compelling at present.

First is the  ten-year framework of programmes(10YFP) on SCP.  This already has backing at the UN and could well lead to the creation of a specific international process to deliver sustainable consumption. It currently commands an explicit reference (paragraph 97) within the draft Rio agreement: ‘The Future We Want’.

Second is a ‘global pact’ on SCP. This would promote dialogue and collaboration in the exchange of information, knowledge and skills in support of a range of initiatives to accelerate SCP, including the UN Environment Programme’s regional work on SCP.

A ‘global pact’ sounds good, but it’s likely to be more of a political statement that – at this stage – still lacks specific content.

CI supports the adoption of the 10YFP at Rio, but inclusion in the final text alone will not guarantee its implementation.

So, what to do?

This was CI’s key question as governments resumed negotiations on the outcome document for the UN Conference on Sustainable Development (UNCSD or Rio+20) during meetings at the UN Headquarters in New York in March.

  

It is possible that both options could be adopted. But this would be a best-case scenario.

There is still a danger that the ‘global pact’ could turn in to a means for avoiding real institutional engagement around SCP and thus hamper the endorsement of the 10YFP at the Rio summit. 

At this stage there are still too many questions unresolved and too many issues to get a clear sense of which of these two alternatives would address SCP in a more effective manner, ensuring real and concrete sustainable solutions to the many problems that we face today. 

We will have to wait for a second round of negotiations, taking place at the UN in New York from 23 April to 4 May, in order to asses which will be the best way forward.

Either way, governments should be able to take a step forward on SCP at Rio. They need to deliver a clear and concrete framework for action for all stakeholders – be it the 10YFP or the ‘global pact’ on SCP. 

This could involve new work on the links between production and consumption and its impacts on people’s health and the environment; delivering more and better information for decision making.

All slow, but concrete actions towards sustainability. 

CI is a UN Organizing Partner for the major group of NGOS in the Rio+20 process. There are nine UN major groups in total: Women, Children and Youth, Indigenous People, Non-governmental Organizations, Local Authorities, Workers and Trade Unions, Business and Industry, Scientific and Technological Communities, Farmers and Small Forest Landowners. CI shares its role with The Northern Alliance for Sustainability and the World Alliance for Citizen Participation.

Consumers can make a difference to conditions in the banana trade

Eliana Guarnoni of CI’s Italian member organisation Altroconsumoexplores the production conditions behind the world’s most popular fruit.

Bananas are the world’s most popular and internationally-traded fruit. The industry is an important source of employment and income for millions of people in developing countries, but all too often is associated with negative economic, social and environmental impacts.

With more and more of us concerned about the story behind the food we buy, consumer rights groups are increasingly looking at the ethics of the tropical fruit trade.  CI recently examined conditions within the pineapplesupply chain, and this has led us to take a closer look at the altogether bigger banana trade.

The World Banana Forum (WBF) is the centre for action on this issue. It is a multi-stakeholder initiative that aims to improve conditions within the banana supply chain by bringing together producers, retailers, trade unions, NGOs, academics and exporters to share good practice and come up with solutions to the most urgent problems.

Working conditions

While attending the Second Conference of the WBF in Ecuador, I visited banana plantations in El Oro and Los Rios. It was particularly interesting to learn about the intensive use of chemicals in both the plantations and the packing areas.

Workers and the local communities surrounding the plantations have reported increasing levels of disease and believe that these chemicals are responsible.

Specifically, they say a lack of protective equipment and inadequate measures to prevent contamination in surrounding areas are to blame.

Discussing strategies to reduce the negative impact of chemicals on human beings and the environment is a top WBF priority, and in El Oro and Los Rios it was clear to see why.

But chemicals aren’t the only thing that poses a health risk on a banana plantation. The weight of a bunch of bananas is around 40 kilos. Workers in the packing area are required to move hundreds of banana boxes (each weighing 18 kilos) every day.

But workers are paid a piece-rate and in many cases they cannot earn enough to satisfy their family’s basic needs, even if they work 12 hours a day.

Women on the banana plantation

I also attended a meeting focusing specifically on conditions for female workers. Around 30 women from morethan 15 countries shared their views and experiences. It was striking to see how many of the issues facing women are common across borders.  

For example, women find it more difficult than men to get hired by banana producers – even though they could be easily employed in the washing area – and are often dismissed when they get pregnant. Challenges like this make it much harder for women in the major banana-exporting countries to make a significant contribution to their family’s livelihood.

The role of consumers

It was not uncommon to hear consumers used as an excuse to avoid taking responsibility for making real improvements to supply chain conditions.

One of the most recurrent arguments is that increased costs translate into higher prices for consumers, which, in turn, causes demand to decrease so that in the end nobody benefits.

But, in fact, studiesconducted in several EU countries show that a significant proportion of consumers are ready to pay more for more sustainable products.

In any case, the price increase is often negligible. It is estimated that plantation workers only receive around 3%-4% of the final retail price paid by consumers.

Raising this share to 5% would mean either asking consumers to pay 0.05 Euros more per kilo or requiring companies and supermarkets to decrease their profits by 1%.

Consumers as a key stakeholder

WBF demonstrated to me that taking part in multi-stakeholder initiatives can be a useful strategy for consumer organisations.

It is clear that the consumer voice – which is so often missing in platforms like this – is very much respected and appreciated by other stakeholders.

WBF also shows how multi-stakeholder initiatives can be a really effective way to focus on the most relevant and urgent issues in a specific sector and to improve the research methodologies used by consumer organisations.

It is also important to demonstrate to other key stakeholders – whether its producers, exporters, trade unions, supermarket chains, intergovernmental organisations, research institutions or NGOs –  that consumer groups are monitoring how products bought by consumers are produced.

This scrutiny can play a vital part in bringing about better conditions in production and trade, while at the same time fostering constructive partnerships between stakeholders to achieve common goals.