Consumer Protection Overview
As an ongoing series, CGAP is partnering with allies in several countries to provide diagnostic assessments of the current state of consumer protection in the financial sector, and the potential for enhanced consumer protection measures in each country. Consumer protection is a series of tools and policies that help both steer providers to act honestly and ethically, as well as help consumers become more proactive and informed financial decision makers. As financial services for low-income/low-access populations have increased, the need for better consumer protection in these sectors has become increasingly important.
Approaches to consumer protection vary greatly across countries and regions, pointing to the need for in-depth evaluation of the range of practice for consumer protection in a low-income/low-access environment. To help evaluate different approaches and share experiences across countries and regions, CGAP has designed a consumer protection diagnostic tool which can be applied in a variety of environments.
The CGAP Consumer Protection Diagnostic Tool assesses a country’s consumer protection framework in the financial system, with a focus on three broad goals for consumer protection: Informed choice—disclosure, transparency and education; protection from fraud, abuse and errors; and recourse and advocacy. These diagnostics are intended to:
- Scan the legal and regulatory framework for consumer protection
- Analyze the applicability of existing consumer protection to providers of low-end financial services
- Assess the judicial process to resolve disputes and provide redress;
- Develop understanding of the country’s consumer protection architecture with respect to the above approaches
- Identify policy gaps and obstacles to transparency and market conduct principles.
CGAP intends these diagnostic tools to be used by governments, concerned industry leaders, consumer advocates, and others committed to advancing the knowledge and practice around consumer protection in low-income/low-access environments. From an in-country perspective, each diagnostic is a snapshot that can help provide context and preliminary analysis for enhancing consumer protection in the country’s financial services sector. For the global audience, each diagnostic offers case studies on approaches across the globe that can be helpful in determining appropriate measures for specific countries.
Another important component of consumer protection is the experience, and behaviors, of the consumers themselves. To better understand how to engage individuals in key areas like financial capability and ability to seek recourse, CGAP is also experimenting with a demand-side consumer protection diagnostic, which will better account for the perspective of those who use financial services and benefit from consumer protection measures.
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