Establishing a Financial Consumer Protection Supervision Department
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.