Press Release
Consumer groups set out demands for fair financial services on global day of action
11 Mar 2011
Press release for immediate release
Consumer groups set out demands for fair financial services on
global day of action
Consumers International (CI), which represents 220 consumer
organisations in 115 countries, will publish a set of international
recommendations for strengthening consumer financial protection on
15 March, World Consumer Rights Day.
The recommendations are in response to the G20 commitment to
address consumer protection in financial services at the Seoul
Summit in November 2010 [1]. The G20's commitment followed a
campaign led by CI and involving consumer organisations from G20
and non-G20 countries.
Drawing on evidence from CI's worldwide membership [2], who
consistently report poor financial services as one of the top
consumer complaints, the recommendations highlight what can be done
to support fairness, safety, access and competition in financial
services.
Ahead of the launch of the recommendations, Consumers
International Director General, Joost Martens said:
"There are as many bank accounts in the world as there are
adults, and 150 million new consumers join the market for financial
services every year. Yet consumers around the world - in both rich
and poor countries - are continuing to get a raw deal from banks
and other financial service providers.
"These ground-breaking recommendations are the product of a
shared sense of anger within the consumer movement that the rights
of financial consumers have been neglected for too long. They
provide a clear and comprehensive set of demands for significantly
improving financial protection for consumers everywhere."
The report, Safe, fair and
competitive markets for financial services: recommendations for the
G20 on the enhancement of consumer protection in financial
services, calls for:
A new international organisation to support work on financial
consumer protection: a permanent international organisation to
enable national financial consumer protection bodies to share good
practice, issue public alerts, and develop minimum standards and
guidelines.
Mandatory financial consumer protection bodies: national
regulators with full authority to investigate, halt and remedy
violations of consumer protection law, including, where necessary,
the right to define specific practices or products as unfair,
deceptive or otherwise illegal.
Clearer contracts, charges and practices: regulators should
introduce a requirement of comprehensibility, and remove from the
market products that do not meet minimum standards. Financial
advice to consumers should be separated from sales-based
remuneration.
Effective redress and dispute resolution: consumers should have
access to adequate individual and collective redress systems. To
alleviate the immense strains experienced by existing systems,
lessons from disputes should also be synthesised into consumer
protection further upstream.
Measures to promote stability and safety of consumers' deposits
and investments: including separation of investment and retail
banking divisions, bank 'living wills' with guarantees for
protecting consumer deposits, and reform of insolvency procedures
so that the rank of creditors is changed to put depositors at the
top.
Competition in financial services: reverse the market
concentration, which, accelerated by the financial crisis, has
contributed to the creation of institutions that are 'too big to
fail'. Remove barriers that discourage consumers from switching
accounts.
Better information design and disclosure: financial service
providers should be required to take more responsibility for
ensuring consumers receive clear, sufficient, reliable, comparable
and timely information about financial service products.
Universal access to basic financial services: governments should
seek to encourage innovation in safe, effective, low-cost methods
for banking inclusion whilst supporting the development of consumer
protection.
The report's launch on 15 March is timed to mark World Consumer
Rights Day, when consumer groups across the world will be lobbying
their governments to act on fair financial services. Copies of the
report will be sent to G20 leaders, the Financial Stability Board,
the OECD and the World Bank.
James Guest, CI's Vice President and CEO of Consumers Union of the
United States, explains:
"The 2008 collapse of the US sub-prime mortgage market was the
starting point for what became the biggest financial crisis since
the Great Depression. At its heart, this crisis started with a
failure of financial consumer protection, and implementing CI's
recommendations will be a major step towards preventing such a
catastrophe from ever happening again. Weak consumer protection in
financial services is an unnecessary risk with disastrous
consequences we cannot afford to repeat. We call on
governments to pay urgent attention to the consumer movement's
demands."
--
[1] In November 2010, G20 leaders meeting in South Korea
made the following commitment in the Seoul Action Plan:
Enhancing consumer protection: "We asked the Financial
Stability Board to work in collaboration with the OECD and other
international organisations to explore, and report back by the next
summit, on options to advance consumer finance protection through
informed choice that includes disclosure, transparency and
education; protection from fraud, abuse and errors; and recourse
and advocacy."
[2] CI conducted a survey of our membership in preparation for
drawing up the recommendations. The results of the survey will be
released ahead of the CI World Congress in May 2011. Evidence
already published by CI is available here: /our-work/wcrd/wcrd-2010
-ends-
For further information contact:
London: Justin Macmullan +44 780 858 5279 jmacmullan@consint.org
Johanesburg: Robert Michel +27 11 7314 500 rmichel@consint.org
Kuala Lumpur: Indrani Thuraisingham +603 772 68 599 indrani@ciroap.org
Santiago: Marcela Ortiz +56 2 638 01 41 mortiz@consumidoresint.org
Notes to Editors:
Consumers International (CI) is the only independent global
campaigning voice for consumers. With over 220 member organisations
in 115 countries, we are building a powerful international consumer
movement to help protect and empower consumers everywhere.
CI's Fair Financial Services Campaign is calling
for consumers to have access to safe, fair and competitive markets
in financial services. In November 2010, the campaign convinced G20
leaders to explore options for enhancing consumer protection in
financial services and their report will be delivered to the next
G20 summit in 2011. The campaign is supported by consumer
organisations around the world.
An executive summary of the CI report Safe, fair and
competitive markets in financial services: recommendations for the
G20 on the enhancement of consumer protection in financial
services is available at www.consumersinternational.org/media/668925/cifinancialreport2011execsummary.pdf
World Consumer Rights Day occurs on 15 March
every year. It is an international day of action and awareness,
observed by consumer organisations and civil rights groups around
the world. The date, 15 March, marks the day President John F
Kennedy told the US congress: 'Consumers by definition, include us
all. They are the largest economic group, affecting and affected by
almost every public and private economic decision. Yet they are the
only important group... whose views are often not heard.' For more,
visit www.consumersinternational.org/wcrd