The G20 finance ministers have agreed on new principles for financial consumer protection developed by the Organization for Economic Co-operation and Development, the Paris-based group said Tuesday.
The set of 10 principles includes the notion that financial firms and their employees should “work in the best interest of their customers and be responsible for upholding financial consumer protection”, and that remuneration structures “should be designed to encourage responsible business conduct, fair treatment of consumers and to avoid conflicts of interest”.
They also say that jurisdictions should ensure that consumers have access to adequate complaints handling and redress mechanisms that are accessible, affordable, independent, fair, accountable, timely and efficient. And, they maintain that financial education should be promoted, and encouraged as part of a wider financial consumer protection and education strategy, which should begin at an early age.
It also includes principles regarding the protection of client assets against fraud; the protection of consumer data and privacy; that financial consumer protection should be an integral part of the legal, regulatory and supervisory framework; there should be oversight bodies responsible for financial consumer protection, with the necessary authority to fulfill their mandates; that all financial consumers should be treated equitably, honestly and fairly at all stages of their relationship with financial service providers; firms and their employees should provide consumers with key information about the fundamental benefits, risks and terms of products; and that competitive markets should be promoted to give consumers choice, and the other benefits of robust competition.
The OECD says that the principles form part of a broader initiative by G20 leaders to strengthen trust and confidence in the financial sector, which is widely recognized to have fallen since the economic crisis.
“Without consumer trust and confidence we could jeopardize the basis for global economic recovery and growth,” said OECD secretary-general, Angel Gurría at a conference in Paris. “Individual households have had to bear the brunt of the consequences of this financial crisis. It has been a catalyst for developing new rules of the game to address financial governance and risks.”
“Financial consumer protection works best when accompanied by policies that promote access to affordable and appropriate financial products and services and through support for financial education and literacy interventions,” he added.
G20 leaders will discuss the principles at their upcoming summit on November 3-4. “We believe that the G20 should continue putting an emphasis, not only on implementing the principles, but on forthcoming financial education issues,” said Gurría.