Financial services—it’s complicated. And that’s why we need to ensure consumers are protected. CI’s Robin Simpson urges inclusion of financial services in the UN’s Guidelines on Consumer Protection.
At the United Nations Conference on Trade and Development (UNCTAD) meeting in Geneva recently, CI made the case for inclusion of financial services in the Guidelines on Consumer Protection (UNGCP), including:
- universal access to basic financial services;
- better design and disclosure of information;
- mandatory requirements for comprehensibility of financial products; and
- representation of consumer interests in the governance of the sector, both regulation and redress.
We believe that, where states have bailed out ailing banks, competition enquiries should be carried out to ascertain whether these assistance packages have increased concentration. This is sensitive territory for a conference whose agenda was dominated by competition issues.
We also called for measures to guarantee stability of deposits stronger than the diluted provisions that were included in the G20/OECD high level principles that we found too limited.
There was a strong measure of agreement in the hall that FS is not, or no longer, solely a rich country issue. Indeed, one of the encouraging aspects of the present troubled times is the emergence of innovative services such as branchless banking in developing countries, whose consumers report savings ratios far in excess of those of the OECD countries, between 30-40% of household income.
As CI board member Connie Lau of the Hong Kong Consumer Council pointed out, these dwarf the puny rates to be found in the first decade of this century in the US where some estimates show a negative rate in some years.
Our colleague Sothi Racahagan from Malaysia made a clarion call for stronger regulatory action and Phil Evans from the UK Competition Commission made the strong case on behavioural grounds for FS not being treated like any other sector.
Complex products with long-term effects, the impacts of which will not be known for years to come, all add up to a dangerous cocktail of ingredients that require far stronger measures than we have seen so far.
Maybe inclusion of FS in the UNGCP will make some much-needed changes a reality.
Now for the hard part.