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Consumer Empowerment and Market Conduct Working Group Second meeting Riviera Maya, Mexico, 27 September 2011
Consumer Empowerment and Market Conduct Working Group Second meeting Riviera Maya, Mexico, 27 September 2011

Consumer Empowerment and Market Conduct Working Group

Second meeting Riviera Maya, Mexico, 27 September 2011 (with a follow-up meeting on the 30th)

Agenda, minutes and list of participants

Members represented in the meeting:

Banco Central del Paraguay

Banco Nacional de Angola

Bank al-Maghrib

Bangko Sentral ng Pilipinas


Bank of Thailand

Bank of Uganda

Bank of Zambia

Banque Centrale du Congo

Central Bank of Armenia

Central Bank of Liberia

Central Bank of Tanzania

CNBV, Mexico

Ministère de l’Economie et des Finances du Senegal

Ministry of Economic Development and Trade, Russia

National Bank of Rwanda

National Credit Regulator, South Africa

Palestine Monetary Authority

People’s Bank of China

Reserve Bank of Malawi

State Bank of Pakistan

Superintendencia de Peru

Superintendencia de Guatemala

Members who were not able to attend:

Banco Central do Brasil

Banque Centrale de la Rép. de Guinée

Bank Indonesia

Bank Negara Malaysia

Central Bank of Kenya


> Welcoming remarks and meeting kick-off

Review of the agenda and meeting goals

Review of preparatory documents

Update on knowledge exchanges

> CEMC WG survey

Presentation and discussion of intermediate results of the CEMC WG survey

> The G20 High-level Principles on Financial Consumer Protection and their implementation

Discussion of impact of the Principles on the work of the CEMC WG members and the possible role of the CEMC in their implementation

> Governance

Election of CEMC WG chairperson (and eventually a co-chair)

Announcement of new chairperson

Discussion and approval of CEMC WG seminal documents (concept note and charter)

> Presentation of CEMC WG sessions at 2011 AFI GPF

Relevance of the sessions and role of CEMC WG members

> Agenda setting and operationalization

Presentation of the Financial Inclusion Data Working Group quality indicators framework

Presentation of proposed log-frame

Discussion of the CEMC WG expected outcomes and outputs

Creation of subgroups

> Operationalizing agenda and next steps

Finalization of log-frame

Finalization of work plan (division of labor between subgroups, participation in relevant events, etc.)


1. Welcome remarks and review of progresses

Simone di Castri of AFI welcomed CEMC WG members and presented the progress made over the past five months.

11 new members joined the CEMC WG. Currently 28 AFI members are represented in the working group.

The CEMC WG was created in Malaysia by 18 AFI members on 7 April 2011. During the first meeting, the WG members:

Agreed to launch the CEMC WG

Identified four priority areas for focus:


Transparency and disclosure


Sales and marketing practices


Avenues for help and redress of client grievances


Financial literacy, capability, and awareness

Provided input into the WG’s charter and concept note

Agreed to undertake a members survey assessing the WG memberscurrent initiatives and challenges in the four priority areas

Set up coordination for the group (Pakistan, Brazil, Philippines, Malawi, Zambia and the BCEAO)

Drafted the WG’s work plan

Requested AFI to set up an on-line working space in the AFI Member zone.

All planned activities were completed.

The following goals set for the second meeting were then reviewed:

Present preliminary results of the survey

Role in implementation of the G20 Principles

Elect Chairperson

Approve charter and concept note

Reach agreement on outcomes and outputs (from the group)

Establish subgroups

Design log-frame

Revise work plan

Dr. Policarp from the Bank of Uganda (BOU) presented the key lessons learned by the delegation of the BOU during knowledge exchange visits to Mexico and Peru, funded through an AFI grant. The areas covered during the visit were: leadership and collaboration with different stakeholders, pricing calculation and disclosure, set up of an ombudsman and financial education in schools, colleges and rural areas.

Simone communicated the appointment of Koid Swee Lian, AFI Policy Champion and Malaysian

representative in the CEMC WG, to CEO of the Malaysia AKPK, the country’s debt counseling and mediation agency.

2. Presentation and discussion of the preliminary results of the CEMC WG survey

Simone presented the survey objectives:

To improve understanding of WG members

To create a foundation for assessing policies

To facilitate the creation of a road map to good policies for the WG

17 countries submitted the filled questionnaire and participants broke out as follows: 11 central banks, 3 banks and regulators and 3 ministries. Together they represent over two billion people across Africa, LAC, MENA, and ECA.

Preliminary results (see power point presentation for the details) and comments per section of the survey:

> Institutional landscape (mandate, interagency coordination, and consultative approach)

The main agencies with responsibilities over consumer empowerment and market conduct are central banks and ministries of finance, but also include regulators of capital markets, insurance providers and consumer protection agencies.

The majority of the surveyed institutions have responsibilities to regulate, supervise, and enforce market conduct regulations.

Often the legal basis is the central bank law and the banking law. In some cases the mandate is embedded in the constitution. This is common in Latin America as well as in some African countries such as Senegal, Zambia and Uganda. Maybe this is now more recognized after the financial crisis.

The main functions of the agencies regarding the empowerment of consumers are to gather and answer consumer queries and to deliver programs to raise consumer awareness. Many agencies have established hotlines but don’t provide themselves with any mechanisms to redress grievances. Participants agree that central banks are not getting involved in debt counseling because it is not their role.

Advocacy groups play a very limited role in the policymaking process. Only 50% of countries consult with consumer advocacy groups and there is a formal role for these groups in only four of these countries. One of the questions is whether this is due to a lack of interest for the input that these groups could provide because they are unsophisticated.

Overall, the two main financial sector weaknesses identified by respondents are the limited access to formal financial products (recognition that financial inclusion and consumer protection can be directly related), and the low levels of financial literacy among consumers. The first point leads to the discussion of a chicken and egg dilemma: Which comes first - financial inclusion or consumer protection? Or financial education?

In terms of priorities, the dominant priority identified by members is financial literacy. The second is protection for bank clients.

> Market conduct (Regulation, oversight, remedial actions, enforcement, self-regulation, transparency and disclosure, sale and market practices, and ancillary areas)

The legal documents that govern market conduct regulation and most often found general consumer protection legislation and financial sector regulation.

The relevant regulations usually apply to formal lenders and deposit takers. A few countries have market conduct regulations that apply to the providers of mobile financial services (MFS). The most probable reason is that there is no sectoral regulation of MFS as they provide a new range of products. Also, mobile financial services that are connected to bank accounts, payments, etc. are usually regulated, while the services on SMS that are not connected to banks, but are provided by a 3rd party, are not regulated. These services are new and need to be regulated.

Regulations commonly require the disclosure of the cost of financial services. A minority of the countries have legal requirements for disclosure in advertising as well as mechanisms for complaint handling and redress of grievances.

Most of the agencies are entitled to conduct on-site and off-site inspection. They make very limited use of media monitoring and mystery shopping. This is emblematic of the fact that the oversight mechanisms of the prudential regulator are typically in place, but the specific techniques of the market conduct regulator are not yet broadly used.

Often the inspections are conducted by the prudential supervisors, and not by the market conduct supervisors. However in 65% of countries there is not a specific audit or inspection programme or tool for market conduct. Participants agree that central bank staff members that have not received training on market conduct might find difficult to oversee market conduct regulation effectively, because this takes special skills and resources. Market conduct oversight includes revision of complaints filed by the clients, of their files and the gathered information, and discussion with the people in the marketing area and the staff of the customer center, etc. Banking inspectors could be provided with a checklist for their inspections to make sure market conduct aspects are adequately verified. This may be an area where substantial improvement can be made in the short term.

There are staff members dedicated to market conduct regulations and oversight in only half of the represented countries.

Regarding the nature of the enforcement actions, in most countries remedial actions are limited to letters of warning. 65% of countries also have the power to issue monetary fines.

A majority of countries have codes of conduct, which in many case have been endorsed by the regulators and are usually enforced by a third party. The survey does not clarify whether it is a general banking code or a specific consumer protection code. The impression is that generally codes of conduct refer to general banking codes, not to specific consumer protection issues. Also, in common law countries, codes of conduct are more common and it is easier to enforce them.

Most countries have transparency and disclosure regulation, which also covers pricing calculation. The disclosure requirements and pricing calculation methodologies vary significantly in the different countries. There is no common understanding on what pricing methodology and type of disclosure is more beneficial for clients. One of the questions arising from the discussion is whether there should be a common pricing and disclosure system for banks and NBFIs. In general, members are very interested in understanding how to guarantee transparency for the unbanked or newly banked.

In 50% of the countries, the comparative information on pricing is published. Usually this information is on the website of the Central Bank. But how many clients can go to these sites? If public comparative information is so important, how do we make this information available to the majority clients? The publication of comparative pricing

information in newspapers is not uncommon. But this doesn’t necessarily help make the information more accessible for the majority of the consumers and the language can be complicated to read and understand. So how to make it simple? Mobile financial services are cheap, simple, and scalable; how can we leverage their usage to help us with the challenge of making comparative pricing information more accessible? Also, in some countries there are many different languages and therefore bringing the information to all consumers is complicated and expensive.

Comment: You can’t protect clients with regulation only. There are other responsibilities too. How can regulators link with others who can help? We need to focus on changing behavior on the supply side and the demand side.

Regarding the deposits mobilization, 75% of countries require periodic disclosure of information to the actual clients, mostly through disclosure in account statements.

The two main priorities for next year are: for 53% of the participants to ensure transparency and effective disclosure in banking; for 29% to identify cost-effective tools to provide information on pricing and terms and conditions of comparable products and providers.

In 40% of the countries there aren’t any regulations for sales and marketing practices.

In most cases there are regulatory requirements concerning the restrictions to prevent personal data release, the obligation to verify the credit history and the repayment history of a potential borrower, the prohibition of unfair practices and the prohibition of reckless lending. One of the discussed problems for the prevention of over- indebtedness is that it is very unusual to get the credit history of microfinance clients.

The main priorities for next year around sale and marketing practices are to increase the suitability of products and services and to make it mandatory for the provider to verify the repayment capacity and credit history of the borrower before selling any credit products.

Credit bureaus: Many countries have implemented credit information sharing but this is mostly among banks and does not include MFIs and others.

Abusive clauses: In a limited number of countries the regulations make explicit provision of the clauses or conditions that are considered void if inserted in a contract between a financial provider and a financial consumer and in some cases can automatically render the whole contract void. This is quite common in Latin America and other common law countries. Participants agree that this might be an easy area for improvement.

> Consumer empowerment (Avenues for help and redress, and financial literacy)

Most countries have complaint handling mechanisms. This is often statutory.

Providers periodically must report on the number and nature of complaints and how they handled them.

The decisions of the regulators and/or ombudsmen are binding upon both providers and clients in 60% of the countries, and in 30% of the countries are not binding upon any of them.

Regarding financial literacy: the survey shows that many institutions have no mandate to enhance it, and only a few countries have strategies, but eventually all of them are going to implement programs to enhance literacy and awareness among consumers.

Countries are missing a baseline, so it’s difficult to design projects and measure

progress and the impact of the implemented programs.

Members are using different tools and implementing many different projects.

If projects are not evaluated, they don’t know their effectiveness.

Members also claim a lack of financial resources for these programs, and haven’t yet achieved yet a satisfactory level of collaboration with private sector and advocacy groups.

Follow up:

Before the meeting, several AFI members had expressed their interest in participating in the survey. The CEMC WG agreed to extend them an invitation to submit their questionnaires by the end of October.

3. Presentation of the G20 High-level Principles on Financial Consumer Protection, and discussion of their impact on the work of the CEMC WG members and the possible role of the CEMC in their implementation

In October the G20 will present the High-level Principles on Financial Consumer Protection. AFI has collected from CEMC WG members comments on earlier drafts of the Principles, and has transmitted them to the OECD. The final version of the Principles will be presented in October. The meeting of the CEMC WG provides an opportunity for the members to reflect on the impact of the Principles on their work and on the role that the CEMC WG could play in the implementation of the Principles, as well as to discuss the areas where these principles might be in conflict with the financial inclusion objective.

The G20 Principles on Financial Consumer Protection are not the only document of this kind that is about to come out. The Financial Stability Bureau (FSB) is also drafting a report on the same topic that will be published soon. Comparing the scope of the two documents: G20 Principles - all financial services; FSB report - only credit and mortgages.

AFI Associate Gabriel Davel presented to the group the G20 High-level Principles on Financial Consumer Protection and the FSB’s draft report. (see presentation)

The discussion that followed focused on the application of the Principles to the CEMC WG members, and on other frameworks that are already adopted, such as the World Bank’s diagnostic tools, and the FSAP assessments. All of these frameworks have implications for policymaking and the lack of harmonization is a concern.

4. The CEMC WG governance: election of the chairperson and approval of CEMC WG seminal documents (concept note and charter)

The CEMC WG members unanimously asked the representative of the Bangko Sentral ng Philipinas, Ms. Belinda Caraan, to act as chair of the CEMC WG. The CEMC WG members also asked the representative of the Central Bank of Uganda, Dr. Polycarp Mugunzi, to act as co-chair.

Members agreed that the appointed roles refer to the institutions and not to the single representatives. This is meant to provide continuity to the role even if the single representative changes during the course of the year.

Members unanimously approve the concept note and charter of the CEMC WG.


Presentation of CEMC WG sessions at 2011 AFI GPF

Ahmed Dermish and Shaun Mundy - respectively the moderator of the GPF sessions on “Financial literacy and Financial Inclusion” and “Transparency Standards for Financial Inclusion” – presented to the CEMC WG members the objectives and formats of the sessions.

6. Agenda setting and operationalization (FID WG quality indicators, CEMC WG log-frame, and creation of subgroups)

After lunch the CEMC WG joined the Financial Inclusion Data (FID) Working Group for a presentation of the draft quality indicators framework developed by the FID WG (see presentation and concept note).

After the presentation, the two working groups break and the CEMC WG members discuss the impact of the draft framework on their work. The group discusses the option to create a joined subgroup with the FID WG. There is disagreement on this option. Instead members decide to create a CEMC WG subgroup to work on all relevant international frameworks and their harmonization. It is agreed that the CEMC WG chair and the focal point of the subgroup will be responsible for communicating with the FID WG.

Simone presents the log-frame template prepared by the AFI M&E Specialists. Members agree to adopt a similar log-frame for the CEMC WG.

Intervention logic

What should it show:

It answers the question:


Change of state and improved situation

What is our vision of the future?


Situational or behavior change or improvement that is necessary to reach the impact

Where would we like to get to in the next 5 years?


The tangible products, services, and results delivered which needs to be achieved to bring about the outcome

What are the main things that need to be delivered (in the next year) by the working group to achieve the vision?


Tasks that have to be undertaken to deliver the desired outputs

What needs to be done to deliver each of these outputs?

Upon proposal of the chair, five subgroups are established, one for each prioritized area and an additional one on the harmonization of the international frameworks. Members decide which subgroup they want to join and who will take on the coordination of each subgroup (x):

Transparency and disclosure

Sales and

Avenues for help and redress


Harmonization of guidelines






Peru x

Palestine x

Liberia x

Pakistan x

Armenia x
















Members agree to break into subgroups to provide their input into the development of the CEMC WG and subgroups log-frames. Due to time constraints, it is agreed that the Chair will work with

the AFI staff on the log-frames and present them on Friday in a follow-up meeting for discussion and adoption. The finalization of the work plan will follow the approval of the log-frame.

Friday, 30 October 2011

The working group members convene again over breakfast. The CEMC WG chair presents the draft log-frames that are discussed and approved as follows:

CEMC WG log-frame


Improved capacity of policymakers to design and implement effective policies to protect and empower consumers


Guidelines on four priority areas for Consumer Empowerment and Market Conduct endorsed by AFI network members


Relevant international frameworks (standards, principles, etc.) are better harmonized

CEMC WG members recognized as leaders in consumer empowerment and market conduct


Developed evidence-based policymaker’s guidelines in four priority areas

Produced report on country experiences

Improved capacity of CEMCWG members to assess and analyze solutions and mechanisms for consumer protection and market conduct


Identified and documented cost-effective tools that deliver information and enable redress for the poorest segment of the population

Increased awareness among other policymakers and international stakeholders about CEMCWG lessons and solutions


Develop and complete stocktaking survey

Conduct Knowledge Exchange visits between CEMC WG members

Undertake diagnostic study on selected CEMC WG members countries


CEMCWG members present experiences and lessons learned in selected external forums

Hold peer learning workshop on diagnostic tools and methodologies, and policy solutions, with strategic partners

Peer reviews of draft policies and regulations


Transparency and disclosure

4 priority


Sales and marketing practices



Avenues for help and redress


Financial education

Transparency and disclosure sub-group’s log-frame

Developed evidence-based policymaker’s guidelines in the area of transparency, with focus on cost-effective access to disclosed information (e.g. re: channels, standard contract for basic products, code of conducts, comparable information of basic products)

Produced report on transparency based on the results of the stocktaking survey

Identified and documented cost-effective tools that deliver information, also for the poorest segment of the population



Analyze transparency section of the stocktaking survey


Identify common challenges and good practices

Undertake diagnostic study on selected CEMC WG members countries


Superintendencia de Guatemala

Superintendencia de Peru (coordinator)



People’s Bank of China

Central Bank of Uganda

Sales and marketing practices subgroup’s log-frame


Developed evidence-based policymaker’s guidelines in the area of sales and marketing practices


Produced report on sales and marketing practices based on the results of the stocktaking survey

Identified and documented cost-effective tools that deliver information, protect and empower consumers, also for the poorest segment of the population


Analyze sales and marketing practices section of the stocktaking survey


Identify common challenges and good practices

Undertake diagnostic study on selected CEMC WG members countries


Central Bank of Tanzania


Palestine Monetary Authority (coordinator)

Bangko Sentral ng Philippinas

Help and redress subgroup’s log-frame


Developed evidence-based policymaker’s guidelines on help and redress mechanisms

Produced report on avenues for help and redress mechanisms based on the results of the stocktaking survey


Identified and documented cost-effective tools that protect and empower consumers providing access to cost-effective help and redress mechanisms, also for the poorest segment of the population


Analyze relevant section of the stocktaking survey


Identify common challenges and good practices

Undertake diagnostic study on selected CEMC WG members countries


Central Bank of Liberia (coordinator)


Ministry of Economic Development of Russia

Ministere de Finances du Senegal

Financial education subgroup’s log-frame


Developed evidence-based policymaker’s guidelines on financial education, with focus on the development of national strategies


Produced report on financial education based on the results of the stocktaking survey

Identified and documented cost-effective tools that deliver financial education, also for the poorest segment of the population


Analyze relevant section of the stocktaking survey


Identify common challenges and good practices

Undertake diagnostic study on selected CEMC WG members countries


State Bank of Pakistan (coordinator)

Banque Centrale du Congo


CNBV Mexico

Reserve Bank of Malawi

National Bank of Angola

Harmonization of guidelines for subgroup’s log-frame


Identified and documented problems with concurrent internationally adopted frameworks (of standards, principles, and indicators) used to assess consumer empowerment policies and market conduct regulations in AFI member countries


Analyze relevant frameworks


Identify common challenges due to the co-existence of concurrent frameworks

Provide guidance to the other 4 CEMC WG sub-groups


Central Bank of Armenia (coordinator)

Central Bank of Thailand


Banco Central do Paraguay

Bank of Zambia

7. Operationalizing agenda and next steps

The CEMC WG members agree over a number of activities to be undertaken over the next months:

Note: all agreed deadlines have been delayed by 1 month due to communication problems encountered in October between the AFI management unit (MU) and the CEMC WG members.







Send the online questionnaire to additional members that have expressed their interest in completing the survey

Nov 10




Submit the questionnaire

Nov 30


Circulate to subgroups the consolidated survey results

Dec 05



Analyze and discuss survey results with subgroups members, including gap analysis and proposed follow up actions

Jan 15


Prepare draft report on relevant area


Send draft report to CEMC WG chair and AFI MU

Discuss feedback and follow up actions with subgroups coordinators and AFI MU



Jan 20


Circulate the draft survey report to members

Jan 30


Send comments on the FID WG quality framework to “Harmonization subgroup” coordinator

Dec 15



Review existing international frameworks and standards and create comparison table highlighting deficiencies to be addressed and opportunities

Submit report to CEMC WG chair

Jan 15






Discuss CEMC WG feedback on the FID WG quality framework w FID WG representatives




Agree on the date and format for the next meeting


CEMC WG chair and AFI MU



List of participants









Banco Nacional




Governor Office

de Angola



Departamento de



Lopes Leite


La supervisión


Supervisión de



Banco Nacional

de Angola




Financial System

Central Bank of Armenia



Head of







Research Institute of Finance and Banking

The People's Bank of China








Deputy Director


Banque Centrale

Republic of


Ndaya Ilunga

du Congo


Betsy Amalia





García Rivas

de Bancos


Regulation &

Central Bank of Liberia


Mussah A.







Chief Examiner,





Education and



Microfinance and

Capital Markets



Reserve Bank of Malawi



Microfinance and





Examiner, Policy

and Regulations

Capital Markets



Reserve Bank of Malawi



Director for

General Direction for Access to Finance

Comisión Nacional Bancaria y de Valores (CNBV)


Luis Trevino


Access to





Direction de la Supervision Bancaire



Directeur Adjoint

Bank Al-Maghrib





Microfinance &

Noor Ahmed

Head of



Microfinance &

Financial Inclusion


State Bank of Pakistan




Consumer's Relations & Market Conduct



Ali Faroun





Benigno M

Member of the Board


Banco Central


Lopez B

del Paraguay

Milla Guillén


Departamento de

Superintendencia De Banca, Seguros Y AFP







Bangko Sentral

ng Philipinas


Maria Belinda













Development and



Ministry for












National Bank of Rwanda




El Hadji


Direction de la Réglementation et de la Supervision des Systèmes Financiers Décentralisés

Ministère de l’Economie et des Finances du Sénégal


Birane Diop

Financial Analyst




Real Sector and Microfinance




Bank of Tanzania






Division Chief


Bank of Thailand








Adjoint au

Etablissements de Crédit et de Microfinance

Banque Centrale des Etats de l'Afrique de l'Ouest (BCEAO)









Director, Special


Governor’s Office

Bank of Uganda



Coordinator FSDP


Bank of Zambia



Joseph Phiri




Gabriel Davel


Simone di Castri

Policy & Grant Manager

Shaun Mundy