Consumer Protection and Financial Literacy: Lessons from Nine Country Studies
This paper summarizes key lessons from reviews of consumer protection and financial literacy in nine middle-income countries of Europe and Central Asia. All the country assessments used a systematic common approach, based on a set of good practices for consumer protection and financial literacy developed by the World Bank's Europe and Central Asia Region. The paper suggests that an ideal financial consumer protection regime should meet three objectives. First, consumers should receive accurate, simple, comparable information of a financial service or product. Second, consumers should have access to expedient, inexpensive, and efficient mechanisms for dispute resolution. Third, consumers should be able to receive financial education when and how they want it. Some of the key recommendations for designing such a regime include:
- One single consumer protection agency to obtain help related to all financial services should be created;
- Simple and standard consumer disclosure would help consumers with complex financial products, and allow them to compare offers by different providers;
- All financial institutions dealing with the public should be registered with a financial supervisory agency;
- All financial institutions should be obliged to have a designated department responsible for handling customer complaints;
- Programs to improve financial education should be rigorously tested and evaluated.