The first meeting and official launch of the newly formed GPFI Subgroup on Financial Consumer Protection and Financial Literacy took place on June 15, 2013 in Moscow, Russia.
The meeting, attended by the Co-Chairs of the Subgroup – China, Russia and the United States – the Implementing Partners Alliance for Financial Inclusion (AFI), Consultative Group to Assist the Poor (CGAP), Organisation for Economic Co-operation and Development (OECD), World Bank as well as interested G20 and non-G20 countries, discussed the work plan of the Subgroup and expected deliverables for the G20.
At the meeting, the GPFI welcomed the OECD as a new GPFI Implementing Partner. The OECD joins existing GPFI Implementing Partners AFI, CGAP, IFC and the World Bank and will support the new Subgroup in particular.
The work of the new Subgroup focuses on aspects of financial consumer protection and financial literacy that are relevant to financial inclusion policies. This new Subgroup will support and complement work of the existing GPFI Subgroups on activities specifically related to consumer protection and financial literacy in their work programs. The new Subgroup will also take steps to reinforce integration of perspectives and experience from developing countries into global discussions and guidance on financial consumer protection and financial literacy.
Effective financial consumer protection is an essential element of financial inclusion, and of growing importance for policymakers implementing policies to support greater financial inclusion. Proportionate regulation and supervision can help ensure transparency and fair conduct by providers, which in turn enables consumers to understand the benefits of formal products and providers and to make choices that fit their needs and represent good value for money. Together, these interventions build trust in the formal system and promote improved uptake of conventional and innovative financial services. Similarly, well-designed financial capability interventions play an important role in reinforcing protective policy regimes and responsible business conduct by enhancing consumers’ abilities to select suitable financial products, exercise their rights, and fulfill their responsibilities.
The G20 Principles for Innovative Financial Inclusion make note of the important linkages between consumer protection, financial education and financial inclusion. Principle 4 (“Protection”) and Principle 5 (“Empowerment”) stress the importance of developing effective consumer protection and financial literacy interventions. Other work of the GPFI (e.g. the GPFI white paper “Global Standard-Setting Bodies and Financial Inclusion for the Poor” and the issues paper “Financial Inclusion – A Pathway to Financial Stability? Understanding the Linkages”) underscores the importance of these two G20 Principles in promoting the kind of responsible financial inclusion that will benefit low income customers as well as contribute to broader development goals in the countries where they live.
At a recent meeting of the GPFI Co-Chairs and Implementing Partners, participants acted to create a fourth GPFI Subgroup focused on these important principles – as the G20 Leaders had encouraged in the Summit Declaration at their Los Cabos Summit.