Consumer protection refers to rules and regulations designed to safeguard customers when they are dealing with financial service providers and to inspire confidence in these institutions. The implementation of consumer protection rules and practices is just beginning in many countries, although consumer protection has gained more prominence in recent years with the global financial crisis and concerns about over-indebtedness.
Transparency, fair treatment, and effective recourse are especially relevant for low-income consumers when it comes to consumer protection. Clients must be able to understand the implications of commitments they make; information must be presented clearly and simply; and there must be a satisfactory method in place for resolving conflicts or disputes.
Implementing consumer protection practices may take time and is likely to evolve as new risks are identified, consumer behavior is better understood, and effective regulatory design is implemented.
The Smart Campaign's new standards and guidance for digital finance mark a profound shift for the sector - from a previous focus on staff behavior towards clients, to the increasing importance of product design and delivery, as well as data protection.
As the microfinance sector has matured, client protection principles have been introduced around issues such as interest rates and product transparency, fair pricing and appropriate product design. But where do gender-based risks fit into these principles?