Behavioral Research to Inform Consumer Protection Policymaking

Consumer protection is essential for any inclusive financial system. Not only is it important to protect already existing financial customers, but 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 is currently 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.

Resources:

Publications

19 April 2017
Insights gained from Mystery Shopping exercises can be critical for regulators and supervisors charged with overseeing DFS markets.
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English (24 pages)
27 October 2015
This Technical Guide is designed to enable policy makers with jurisdiction over market conduct issues, consumer protection organizations, and development agencies to conduct mystery shopping exercises.
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English (108 pages) | Japanese (102 pages)

From Our Blog

Men from a factory carry blue jeans on their shoulders
16 February 2016
We know more today than every before about how customers use financial services. But we still don’t know enough about what information customers access about products they are considering, and how this informs their financial decisions.
30 June 2014
Policymakers in emerging markets are only recently starting to use behavioral methods to address consumer protection challenges. There are some straightforward ways in which consumer protection policy can be more effective when it is based on insights into consumers' behavior.