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
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
What Will Drive This?
1. Public Pressure
2. Public Policy
3. Corporate Social Responsibility
4. Institutional Mission
5. Competitive Pressure
Push or Pull?
PUSH
PULL
1. Public Pressure
3. Corporate Social
Responsibility
2. Public Policy
4. Institutional Mission
5. Competitive Pressure
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
2. Public Policy
1. Increased Legislation / Regulation for
Transparency
– Mandatory Standardized Disclosure & Reporting
Requirements
2. Client Confidentiality
– Data Protection
3. Ombudsman
4. Credit Bureau
2. Public Policy (cont.)
5. Legislation / Regulation Limiting
Application of Interest Rate and
Fee Changes
6. Mechanisms for Redress
7. Interest Rate Caps
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
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
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
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
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
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?
Push or Pull?
PUSH
PULL
1. Public Pressure
3. Corporate Social
Responsibility
2. Public Policy
4. Institutional Mission
5. Competitive Pressure
Thank you
Brian Branch
Chief Operating Officer & Executive Vice President
World Council of Credit Unions