Establishing a Financial Consumer Protection Supervision Department

Paper
Date Published: 
Mar 2014
Author: 
Jaeger, J., Chien, J. & Fathallah, S.
Publisher: 

Discussing guidelines and principles on designing financial consumer protection policy

This paper aims to assist policymakers and regulators in establishing a financial consumer protection supervision department (FCPSD) within the main financial regulator of a country. It provides practical information drawn from the experiences in five countries: Armenia, the Czech Republic, Ireland, Peru, and Portugal. The paper states that there is obviously no 'one size fits all' approach to establishing a FCPSD, as the approach is highly dependent on country context. Nevertheless, the five case study countries highlight a few common obstacles and lessons learned. This paper discusses the following sections in detail:

  • Background of financial consumer protection and methodology used for the study;
  • Importance of ensuring a strong and clear legal mandate to undertake financial consumer protection combined with high-level policymaker support;
  • Scope, coverage, statutory objectives, and responsibilities of FCPSDs with a focus on developing initial agenda and determining priorities; 
  • Suitable organizational structures for establishing FCPSDs  with a focus on choosing between stand-alone departments and internal divisions, scope of separation from prudential supervision, and coordination with other departments;
  • Staffing and internal structure appropriate for FCPSDs;
  • Supervisory tools and approaches that can be used by FCPSDs with a focus on conducting on-site inspections, off-site supervision, market monitoring, enforcement, and rule making.
Type: 
Paper