Principles in Details
Legal, Regulatory and Supervisory Framework
The principle confirms ‘legal recognition’ of financial consumer protection. That is, financial consumer protection becomes an integral part of the legal, regulatory and supervisory framework.
Accordingly, strong and effective legal and judicial or supervisory mechanisms should exist to protect consumers from and sanction against financial frauds, abuses, and errors. As there are newly-introduced channels for financial services through mobile, electronic, and branchless distribution of services, appropriate and relevant mechanisms for this new trend should be developed. While building upon the regulatory mechanism, the potential benefits of services provided via new channels should be well preserved.
Role of Oversight Bodies
Principles, by themselves, may not be enough to be ‘influential’ in effect. What is more in need is the existence of oversight bodies explicitly responsible for financial consumer protection. Such bodies are to have clear and objectively defined responsibilities and appropriate governance. Oversight bodies are responsible for observing 1) appropriate standards of confidentiality of consumer, 2) proprietary information, and 3) avoidance of conflicts of interest.
Moreover, cooperation with other oversight bodies are strongly encouraged, both at domestic and international scale. As there are certain issues arising from cross-border flows, international cooperation is considered not an option, but a must these days.
Equitable and Fair Treatment of Consumers
Consumers are to be treated ‘equitably, honestly, and fairly’. This treatment should not be one-off, but rather it should remain at all stages of consumers’ relationship with financial service providers. It is the right of financial consumers, as service-receivers. By serving their consumers in such manner, service providers are building good governance and corporate culture. More emphasis is given to the consumers who are financially vulnerable.