Technical Guidance on Consumer Protection

28 August 2013

A new CGAP Technical Guide offers practical guidance for bank supervisors as they implement consumer protection supervision and enforcement in emerging markets and developing economies.

In many emerging and developing countries, the bank supervisory authority – which oversees banks and often non-bank financial service providers to ensure their compliance with solvency rules and other prudential norms – is also beginning to play a key role in financial consumer protection. Yet international policy guidance to date has paid inadequate attention to the specific challenges faced by these authorities when they take on this new role and seek to translate consumer protection regulations such as disclosure rules or responsible lending measures into supervision procedures and tools. “Most supervisors in emerging and developing economies, even those in low-income countries, have workable options available to them to improve consumer protection supervision,” said Denise Dias, author of the Guide and currently a Bank Examiner for Market Conduct Supervision at the Central Bank of Brazil.

“The Guide was written keeping in mind the realities faced by many bank supervisors and ways to build off their existing expertise and procedures, such as off- and on-site inspection of financial service providers. It also highlights tools such as “mystery shopping” that can be especially useful in uncovering weaknesses in consumer protection practices but are less commonly used by supervisors in prudential oversight.”

Given that most new market conduct supervision teams face real financial and human resource constraints, the Guide aims to help them decide what to do first and which tools are likely to work best for specific tasks such as assessing the adequacy of financial service providers’ disclosure and complaints handling practices. The Guide also advocates a gradual approach to implementation, with sequencing and prioritization based on risk and supervisory capacity. Focused on supervision, the Guide synthesizes and uses illustrations from research of supervisory practice in 45 countries and offers numerous links to tools and examples from a variety of authorities in such countries.

Browse the guide at CGAP.org.