Fresh Start in Consumer Protection: G20 publishes new Principles OECD and G20 have published the G20 HIGH-LEVEL PRINCIPLES ON FINANCIAL CONSUMER PROTECTION. While during the neo-liberal period before the crash consumer protection in financial services "consumers" had been reduced to "users and clients", "protection of their wellbeing" to the guarantee of (financial) "advantages" and justice to the guarantee of "markets and choices", "the process of consumption" to a one-shot decision, the "allocation of income through savings, credit and insurance" to a play where an investors seeks to achieve maximum profits, replacing "responsibility for the outcome and social effects" to "fairness in a market game", the G20 now seem to come back to consumer protection where people have to access goods and services to satisfy their needs through a market mechanism which is motivated by profit and size of available money for demand based on a single principle that puts justice, needs and life-time to second rank. "The high-level principles are designed to assist G20 countries and other interested economies to enhance financial consumer protection." After years of free market ideology, regulation is back on the stage: "Regulation should reflect and be proportionate to the characteristics, type, and variety of the financial products and consumers, their rights and responsibilities and be responsive to new products, designs, technologies and delivery mechanisms. Strong and effective legal and judicial or supervisory mechanisms should exist to protect consumers from and sanction against financial frauds, abuses and errors." Consumers are now recognised with their needs and not only with profit goals where "fundamental benefits, risks and terms of the product" have to be disclosed. Competition is no guarantee where conflicts of interest stir supplier behaviour. "They should also provide information on conflicts of interest associated with the authorised agent through which the product is sold". Fair treatment is now complemented by equitable behaviour and selling a product is no longer enough to protect the use of financial products during its lifetime: "All financial consumers should be treated equitably, honestly and fairly at all stages of their relationship with financial service providers." If we evaluate the recent Directives in financial services (Consumer Credit, Mortgages, Investment and Payment Services) none would truly stand this test. They all still adhere to the old ideology that the market is the best friend of the consumer and needs no protection. It is still stupidity, incapability, lack of education etc. which is seen as the reason for market failures with regard to the needs of especially vulnerable consumers. The EP has started to evaluate these Directives but even the statements of the EP deputies' initiative FinanceWatch show that no concern has been given to those parts of the population who suffer most from the crisis either through unemployment, reduction of public welfare spending, less collective goods and high interest for credit which basically finances old debts instead of new investments. The crocodile tears about those consumers who lost some of their money when they invested it into products which promised higher returns than any labour could get at that time is a misrepresentation of the gigantic process of reallocation of wealth and economic power from the lower to the upper part of society. These principles could be taken as a new starting point. ID: 47961 Publication date: 26/03/12     URL(s): OECD/G20 Principles of financial consumer protection

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Created: 26/03/12. Last changed: 26/03/12.
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