Publication: An Introduction to Developing a Risk-Based Approach to Financial Consumer Protection Supervision
Date
2022-12
ISSN
Published
2022-12
Author(s)
World Bank
Abstract
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.
Citation
“World Bank. 2022. An Introduction to Developing a Risk-Based Approach to Financial Consumer Protection Supervision. © Washington, DC: World Bank. http://hdl.handle.net/10986/38419 License: CC BY 3.0 IGO.”