A research study: Consumer advocacy in financial services and products


HAPPY EASTER TO ALL CONSUMERS!

​What is the role of consumer organizations to support consumers of financial services and products? 

​This is a joint research study of the Consumers International and the Consultative Group to Assist the Poor.  The report describes the unique role consumer advocacy plays to ensure financial service market places are safe, fair, sustainable and effective. The report highlighted six (6) key approaches that the respondents, 36 CI members from low and middle income countries advocate for better financial consumer protection. The report in particular noted the participation of Laban Konsyumer Inc., which was established only four years ago after the founder left his government position.

In the Asean region, the following consumer organizations participated in the research study, namely:

1. Indonesia- Consumers Association from Indonesia or YLKI 

2. Singapore- Consumers Association of Singapore or CASE

3. Malaysia- Consumers Association of  Penang or CAP and Federation of Malaysian  Consumers Associations or FOMCA

4. Thailand-  Foundation for Consumers or FFC 

5. Philippines - Laban Konsyumer Inc. or LKI.  

81% of the respondents, including Laban Konsyumer Inc., stated that their organizations focused on Financial Services, which ranked 2nd to Telecommunications (83 %.)

The respondents stated that they work in relation to financial services with the following groups. Laban Konsyumer picked Number 1, 4, 5 and 6

1. Academe /Experts -  78%​​​ LKI

2. Volunteers               -  73%

3. Other NGOs            -  57%

4. Regulators               - 54% ​​​LKI

5. Financial Service Providers                  -51%​​​ LKI

6. Other NGOs             - 43%​​​ LKI

7. Legal aid      ​​-19%

The respondents considered consumer education and information/ awareness as the most important approach to help consumers of financial services. Below are the details of the responses (including those of Laban Konsyumer) top 5 answers ranked 1 as most important and 5 the least important:

1. Consumer education ( formal /informal ) ​68%

2. Information and awareness (publication, Radio, social media, meetings) ​​​65% ​​LKI 2

3. Dialogue/advocacy /influencing  policy Makers)​​​​​​​ 56%​​ LKI 4

4. Dialogue /advocacy/influencing With companies ​​​​​​40%

5. Own research into consumer experience​​35%  ​​LKI 3

6. Debt counseling ​​​​​​32%

7. Own analysis of official data ​​​30%

8. Complaints handling​​​​​29% ​​LKI 1

9. Own research into products , 

Mystery shopping ​​​​​25%

10. Legal aid ​​​​​​​23%

11. Developing pilot products​​​​4% ​​LKI 5

On the question of engagement of consumer advocacy on the financial services, 76% including LKI said that official structures exist for consumer representation in their country such as dialogues with regulators or parliamentary committees; 65 % of these respondents including LKI said the consumer organizations are engaged in the structure. However, only 6 % said the participation is funded (excluding LKI), 59 % (including LKI) said these structures meet only as required and 26% (including LKI) said these structures are influential.

The   respondents ranked the significant challenges facing financial consumers in the country, either as Important Factor or I F or Fairly Important or F I. LKI responses are on the 2nd column.

1. Contract terms not explained clearly ​​​88% ​I F​

2. Hidden or inflated charges ​​​​86% ​I F​

3. Unfair terms ​​​​​​​86% ​I F

4. Undisclosed risk​​​​​​ 73%​ I F

5. Lack  of strong protection ​​​​​71% ​I F

6. Extremely high interest ​​​​​69% ​F I

7. Over indebtedness ​​​​​​65% ​F I

8. Unclear remittance fees ​​​​​65%​ F I

9. Data privacy violation ​​​​​63% ​I F

10. After sales services ​​​​​​62%​ I F

11. Aggressive marketing ​​​​​59%​ I F

12. Breach of contract​​​​​​ 56%​ F I

13. Missing or ineffective redress  mechanism​​ 45% ​I F​

14. Failure to deliver the service​​​​ 44% ​I F

15. Erroneous information ​​​​​41% F I​ 

16. Exclusion from service ​​​​​39% ​I F

17. Dropped Telecom lines ​​​​​37% ​I F

18. Scams ​​​​​​​​37% ​I F

19. Discrimination​​​​​​22%​ F I

The survey asked members to share strategies for effective support to consumers of financial services and products.  The strategies are as follows:

1. Complaints handling and facilitating dispute resolution on behalf of consumers.

2. Providing consumer debt counselling.

3. Market research, monitoring provider products/services and understanding consumer perceptions and behaviors.

4. Awareness-raising campaigns and financial education.

5. Representing consumer voices in the legislative body and policy makers.

6. Pubic interest litigation to enforce consumer rights.

When asked what  would be  most useful  in supporting  LKI future advocacy on financial services , my reply was “ Virtual access to experts on financial services “ which should be taken to mean that “access”includes  assessment of  training needs. 

The research study was conducted in May and June 2020 and released in March 22, 2021. Should they wish, readers may visit the Consumers International website to download the full report.

Atty. Vic Dimagiba is President of Laban Konsyumer Inc., AB, LLB, and LLM

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