The Banking Executive Magazine - Septmber Issue 2021

ISSUE 153 SEPTEMBER 2021 the BANKING EXECUTIVE 1 Editorial FINANCIAL CONSUMER PROTECTION A lesson learned from the past crises is that consumers make poor financial choices, taking on too much debt, misunderstanding investment risks and choosing financial products that do not match their needs. Combining the above with new technology and innovative businesses, mobile devices, high speed data communication, online commerce, real time payment and disruptive new technologies, consumers are subjected to different sorts of financial complexity. Over recent decades, financial products protection evolved to keep up with the fast pace of financial innovation. The complexity of financial services, where the range of available financial products is broad, and the consequences of financial choices are significant, financial decisions require consumers to assess risk and uncertainty and evaluate trade-offs between the near term and the long term. Financial consumer protection agencies are taking charge of educating consumers and protecting their rights. These agencies function under governmental or international umbrellas. Their prudential, supervisory and consumer protection role include the setting of statutory codes of conduct for financial service firms, the display of information that should be provided and how complains should be dealt with as well as personal finance education. Technological innovation that bring the potential benefits of lower costs, speed, automation and convenience for consumers also pose some challenges for regulators in relation to consumer protection. Regulators need to ensure an appropriate framework that respects consumer protection and interests in their design, operations and monitoring of online distribution and automated advice channels. Given the scope for online distribution channels to foster cross border trade in financial services, it is essential that the legislative framework fosters internationalization without compromising consumer protection. There is a need for greater national and international cooperation on how financial institutions are regulated and supervised to enhance consumer protection and maintain financial stability. Dr. Joseph Torbey, Chairman - World Union of Arab Bankers