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Protecting and Educating Consumers in the Financial Sector

This seminar explores strategies for consumer protection in the financial sector, emphasizing transparency, responsible lending, and financial literacy. Key topics include public pressure, policy intervention, corporate social responsibility, and institutional mission alignment to enhance consumer well-being. The discussion also touches on competitive pressures to drive positive practices and establish sustainable business opportunities. Participants will examine current trends and future prospects for ethical financial services. Join us to shape the future of consumer education and protection in the economic landscape.

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Protecting and Educating Consumers in the Financial Sector

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  1. Protecting and Educating Consumers in the Financial Sector OECD Paris June 15, 2009 Brian Branch Executive Vice President & Chief Operating Officer World Council of Credit Unions

  2. Consumer Protection and Education(CPE) • Safeguarding of Consumer Interests in Terms of Quality, Price and Safety • or … • Providing Financial Services in Ways that Improve and do not Harm the Economic Well-being and Prosperity of the Consumer

  3. What Will Drive This? • Public Pressure • Public Policy • Corporate Social Responsibility • Institutional Mission • Competitive Pressure

  4. PUSH Public Pressure 2. Public Policy PULL Corporate Social Responsibility Institutional Mission 5. Competitive Pressure Push or Pull?

  5. 1. Public Pressure • Growing Demand for more Responsible Financial Institution Corporate Behavior • Global Trends in Transparency of Financial Sector • Greater Immediate Information Access via Internet • Reputational Risks

  6. 2. Public Policy • 1. Increased Legislation / Regulation for Transparency • Mandatory Standardized Disclosure & Reporting Requirements • Client Confidentiality • Data Protection • Ombudsman • Credit Bureau

  7. 2. Public Policy (cont.) • 5. Legislation / Regulation Limiting Application of Interest Rate and Fee Changes • 6. Mechanisms for Redress • 7. Interest Rate Caps

  8. 3. Corporate Social Responsibility • How will Corporate Social Responsibility Evolve in the Financial Services Sector Post 2008-2009? • Previously, Focused on Climate Change and Greening, Financial Access/Inclusion and Financial Literacy • Now, Discussions Emphasize Responsible Lending, Consumer Protection and Financial Literacy • From Corporate Social Responsibility To Consumer Protection & Education

  9. 4. Institutional Mission • Degree of Acceptance will Vary whether Financial Institution is Mission or Shareholder Value-Driven • Credit Union Objectives of Financial Empowerment • …to advance financial and economic well-being of their members • Micro Finance Institution Objectives of Financial Inclusion • CPE driven by mission and business model • … contributes to stakeholder mission and value

  10. International Credit Union Consumer Protection Principles • Disclosure of Rates and Fees • Periodic Statements • Honest and Non-Deceptive Promotions • Fair Credit Practices • Dignified Collection Practices • Member’s Consent to Share Information • Dispute Resolution Services • Provide Education about Thrift and Wise Use of Credit Provide Education about Thrift and Wise Use of Credit • Fair and Forthright Conversions

  11. 5. Competitive Pressures • Is there a Competitive Advantage for Financial Institution in CPE? • Minimizing Credit Risk • Reputation for Business Conduct Becomes a Differentiating Brand Presence • Builds Stronger Relationship with Clients / Members over Long Term

  12. How Deep Will This Go? • Charitable Exercise / Add-on or Business Strategy / Market Opportunity? • Giving Money Away and Volunteering in the Community (CRA) • Or Way of Contributing to the Bottom Line

  13. Business Case for CPE • Will Improved Practices, Industry Standards, Best Practices Become Established, Sustainable? • Will Financial Institutions Establish Policy and Management Systems to Embed These into Their Operations and Report on Performance? • Is There a Strategic Approach to Become a Business Opportunity?

  14. PUSH Public Pressure 2. Public Policy PULL Corporate Social Responsibility Institutional Mission 5. Competitive Pressure Push or Pull?

  15. Thank you Brian Branch Chief Operating Officer & Executive Vice President World Council of Credit Unions

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