Behavioral Research to Inform Consumer Protection Policymaking
Consumer protection is essential for any inclusive financial system. Not only is it important to protect existing financial customers, it also helps to instill confidence in the financial system for potential future customers. For low-income consumers, who often have limited formal financial service experience and options, as well as lower education levels, these consumer protection goals are particularly vital. But consumer protection policies can’t be designed based only on what policy makers think consumers need. They must be grounded in the reality of consumers’ lives, based on solid research that shows how people really act and interact with their financial services, and which provides insights into their vulnerabilities.
In June 2014, CGAP published Applying Behavioral Insights in Consumer Protection Policy, which illustrated how consumer and behavioral research insights could be applied to strengthen consumer protection policy and regulation in key areas such as disclosure, complaints handling, and responsible lending. A key part of the evidence was findings from research tools CGAP had developed in close collaboration with policy makers, such as mystery shopping tools, behavioral mapping methods for key issues such as recourse, and testing of improved methods for disclosure of product terms and conditions. Having established the high potential of behavioral research for improved consumer protection policy, CGAP has been focusing on supporting the development of new policy interventions based on these insights, increasing policy maker capacity to implement these tools in their jurisdictions, and exploring the particular behavioral issues and opportunities that digital financial services raise. One of the main outputs and successes of this work is the development of a training curriculum for behavioral skills for consumer protection policymaking, which has been tested and is under further development.
- CGAP Technical Guide: Mystery Shopping for Financial Services
- CGAP Explainer Podcast: Mystery Shopping for Financial Services
- CGAP Focus Note: Applying Behavioral Insights in Consumer Protection Policy
- CGAP Focus Note: Incorporating Consumer Research into Consumer Protection Policy Making
- CGAP Working Paper: Informed Consent: How Do Make it Work for Mobile Credit Scoring?
- CGAP Focus Note: Making Recourse Work for Base-of-the-Pyramid Financial Customers
- World Bank Policy Research Working Paper: Financial (Dis-)Information: Evidence from a Multi-Country Audit Study