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Protecting and Educating Consumers in the Financial Sector

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).

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Protecting and Educating Consumers in the Financial Sector

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  1. 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

  2. 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

  3. What Will Drive This? • Public Pressure • Public Policy • Corporate Social Responsibility • Institutional Mission • Competitive Pressure

  4. PUSH Public Pressure 2. Public Policy PULL Corporate Social Responsibility Institutional Mission 5. Competitive Pressure Push or Pull?

  5. 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

  6. 2. Public Policy • 1. Increased Legislation / Regulation for Transparency • Mandatory Standardized Disclosure & Reporting Requirements • Client Confidentiality • Data Protection • Ombudsman • Credit Bureau

  7. 2. Public Policy (cont.) • 5. Legislation / Regulation Limiting Application of Interest Rate and Fee Changes • 6. Mechanisms for Redress • 7. Interest Rate Caps

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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?

  14. PUSH Public Pressure 2. Public Policy PULL Corporate Social Responsibility Institutional Mission 5. Competitive Pressure Push or Pull?

  15. Thank you Brian Branch Chief Operating Officer & Executive Vice President World Council of Credit Unions

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