Financial consumer protection ‘involves laws, regulations and institutional arrangements that safeguard consumers in the financial marketplace’, as defined by the World Bank.
According to the Second National Financial Inclusion Strategy 2016 – 2020, the Bank of Papua New Guinea will be taking the lead in developing the framework.
Development of the framework will focus on three areas. They are: Regulatory; Financial Service Providers; and Consumers.
Regulators must put in place a regulatory framework that sets the standards for financial consumer protection as well as processes to check compliance.
Financial Service Providers also need to have the capacity to conduct business consistent with financial consumer protection principles, while consumers need to be aware of their rights.
According to the Consultative Group to Assist the Poor (CGAP), consumer protection is an essential element of inclusive financial systems.
This is both to ensure that current users of formal financial services get transparent and fair treatment in the market and to instill overall confidence regarding formal financial services and providers among potential consumers.
Most policy makers and regulators in emerging markets and developing economies view effective consumer protection as an essential enabler of financial inclusion.