These are the recommendations and strategies of the research project of the Consumers International and the CGAP to assess the state of consumer advocacy and policy work in financial consumer protection in low and middle income member countries.
The following recommendations were discussed:
Consumer organizations to consider consumer organizations structured as federations, and consider assigning mentors so that consumer organizations with healthier budgets can support budget-challenged consumer organizations.
To consider conducting surveillance of social networks for financial fraud and organizing consumer financial fraud fora to share information and cultivate relationships with the police and Interpol to better protect consumers before mass frauds occur.
Consider collaborations with technical and standards setting bodies that work on digital financial services security and quality of services standards, such as the United Nations International Telecommunications Union
Collaborations with legal aid initiatives, law faculties and bar associations to cultivate an interest in consumer protection law initiatives in the next generation.
In response to these, at LKI, we will also consider creating new initiatives in partnership with universities, such as the establishment of a consumer protection legal clinic that could be a partner to which to refer collective consumer legal actions. There are also legal organizations, like the Integrated Bar of the Philippines that consumer organizations in the Philippines can partner for free and receive legal services.
One particularly interesting recommendation as well was the use of existing crowd-funding sites or the establishment of a similar platform that can support the consumer movement and public interest projects.
In line with the research, LKI will be advocating for a regular source of government funds without strings attached, either for services provided through a regular budget allocation, or via a third-party source of funding such as the dormant accounts Depositor Education and Awareness (DEA) Fund in India.
We will also explore requesting foreign embassies present in low income and emerging markets to allocate discretionary funds to financial consumer protection and financial literacy projects by NGOs, e.g. the United States Embassy Small Grants Program.
The study also brought up the use of existing tools such as the CGAP mystery shopping guide to conduct an analysis of the various digital financial services sold to consumers. Such an analysis can also include a review of the terms and conditions of the products sold, such as standard form user agreements, as compared to the existing legal/regulatory frameworks and established good practices on issues like disclosure, suitability and data privacy.
Another possible tool would be the use of egregious financial complaints stories to create docudramas such as IDEC’s video of the over-indebted consumer whose loan obligations require 120% of his income.
In solidarity with the research, LKI also suggests that government law/policy-makers and regulators consider the following:
Governments could establish legal reform committees that systematically involve consumer organizations. This approach was taken by CCZ when drafting the Consumer Protection Act for the Zimbabwe Government.
We also support allocating funds to consumer organizations that offer financial complaints handling. Funding can be contributed by financial institutions and based on the percentage of industry complaints received about their products. Laban Konsyumer will soon launch a complaints mediation solutions program with the consents of the parties to enter a mediation process.
I believe there can also be the establishment of a formal mechanism and supporting legal/regulatory framework if necessary, to provide debt relief for over-indebted consumers.
The research also brought up the creation of a letter of principles that addresses the main problems facing financial consumers, such as a Consumer Bill of Rights.
One aspect I advocate strongly is the involvement of consumer organizations in the design and implementation of financial literacy programs. There should be involvement of consumer organizations in regular fraud forums, whereby police, regulators and consumer organizations can share information on financial fraud trends and consumer organizations can create awareness-raising campaigns with this information to better prevent frauds on consumers.
There should also be the establishment of a financial consumer protection supervisory technology unit that collaborates with consumer organizations to develop new financial consumer protection supervisory tools.
LKI believes the study’s thrust to recommend that bilateral and multilateral organizations and foundations consider consultations with consumer organizations and/or involving them in the due diligence process prior to grant issuance, or investments in financial services providers.
We recommend further research is conducted to consider the following:
The specific level of complaints that consumer organizations receive on financial and digital products in order to establish whether these complaints indicate a legal/regulatory gap or an existing failure to implement laws /regulations by the regulator, or consumer financial illiteracy, with the effectiveness of regulatory consultation and if joint project work has taken place between consumer organizations and government regulators.
Atty. Vic Dimagiba, AB, LLB, LLM
President, Laban Konsyumer Inc.