Consumer Protection Regulation in Low-Access Environments: Opportunities to Promote Responsible Finance

Assessing options for design and implementation of consumer protection rules
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This Focus Note describes current practices and assesses options for design and implementation of basic consumer protection rules, focusing on low-access environments.

Achieving basic consumer protection can contribute to more inclusive and stable financial markets over time, particularly if it extends to lower income consumers. The paper draws on available experience to begin charting the path towards effective financial consumer protection. It states that:

  • Three broad principles that should govern design and implementation of consumer protection policy are transparency, fairness and the right of effective recourse;
  • Regulation should seek to achieve the broadest feasible coverage, creating a level playing field for different provider types offering similar products;
  • Different financial services raise different consumer protection concerns and require different regulatory approaches;
  • Making key protection measures work for low-income and low-literacy consumers is challenging, but not impossible.

Finally, regulation is not the only solution to consumer protection problems observed in developing countries and emerging markets. Industry standards, such as codes of conduct and effective financial capability initiatives, also can contribute to increasing consumer protection and fair treatment.