Principles in Details
Disclosure and Transparency
The beginning of consumer protection is providing consumers with ‘key information’. Key information may include the fundamental benefits, risks and terms of the financial product. As mentioned in the previous post, consumers should be appropriately treated ‘at all stages of their relationship with service provider’. That is, key information should be provided at all stages, if needed.
Not only it is important to provide information in a timely manner, but also the given information should be accurate, honest, understandable, and not misleading. Also, when providing consumers with financial advice, the advice should be given with consideration for consumer’s profile. The advice should be customized, depending on consumer’s financial objectives, knowledge, capabilities and experience. Otherwise, financial advice may be of no use at all, even if being professional and sophisticated.
Financial Education and Awareness
First of all, what is financial education? According to the OECD INFE (International Network on Financial Education), financial education is the process by which financial consumers/investors improve their understanding of financial products and concepts; and through information, instruction and/or objective advice develop the skills and confidence to become more aware of financial risks and opportunities to make informed choices, to know where to go for help, and take other effective actions to improve their financial well-being and protection.
Providing financial education will deepen consumer financial knowledge and capability, while it is especially important for financially and socially vulnerable groups. Also, ‘timing’ matters with regards to financial education and awareness. It should be encouraged at an early age, while being accessible for all life times. There should be some ‘targeted’ approaches specifically designed for certain age groups.