Publication: An Introduction to Developing a Risk-Based Approach to Financial Consumer Protection Supervision

Thumbnail Image
Files in English
English PDF (2.92 MB)

English Text (293.13 KB)
World Bank
Financial products and services play a significant role in enabling consumers to build their resilience, seize opportunities, and meet essential needs but consumers also face risks when engaging with such products and services. This is due to a range of factors, including information and power asymmetries and abusive or overly aggressive market practices. Although an ongoing effort, over the past decade significant progress has been made around the world to strengthen FCP regulatory frameworks. Policy makers have been incorporating a broader range of regulatory approaches to protect consumers from inappropriate market practices, assist consumers to make better-informed decisions regarding the use of financial products and services and ultimately achieve better outcomes for consumers. However, such regulatory frameworks must be operationalized, including through supervision, to be effective. Authorities are increasingly turning to the task of developing appropriate supervisory processes and frameworks to monitor and implement FCP regulation effectively and foster compliance across the financial market as well as good conduct and consumer outcomes more generally. Undertaking FCP supervision can be a daunting task given the wide range of financial products, providers, and issues to be considered, combined with limited supervisory capacity and resources. This note seeks to assist in addressing this critical knowledge gap by providing introductory guidance on key issues, constraints, and decisions that Authorities should consider when establishing RBS for FCP. Given the need to customize RBS models to the characteristics of each country and its existing supervisory infrastructure, this Note does not specify predefined solutions but provides Authorities interested in implementing an RBS model with an overview of various matters to be considered when designing a tailored RBS approach, with the aim of assisting the planning and development of a context-appropriate approach. A range of practical examples are provided as illustrations.
World Bank. 2022. An Introduction to Developing a Risk-Based Approach to Financial Consumer Protection Supervision. © Washington, DC: World Bank. License: CC BY 3.0 IGO.
Report Series
Other publications in this report series
Journal Volume
Journal Issue
Associated URLs
Associated content