The UNCTAD has revised its consumer protection guidelines especially with regard to financial services that until now had been omitted. The USA has called this premature since OECD and G20 are working on the same issues. The Draft is based on a survey in 2014 of UNCTAD with member countries in which only a few have participated.
The new draft of the principles is in general disappointing
The principles as well as the report are primarily based on the information model. If consumers are well educated, know the risks, if the products are transparent and if vulnerable consumers are singled out and especially cared for, the financial market should work properly for the sake of consumers. We are amazed to find the principle of responsible lending, however it is set within the inadequate and heavily challenged information model. The Principle is completely limited and linked only to the checking of creditworthiness, thus ignoring and resisting the Community Reinvestment Policies of grass root fair finance activities of the NCRC as well as with the anti-discrimination and productive use of credit philosophies.
We can read nothing about risky products, on discrimination by risk based pricing, on overindebtedness, chain credit, flipping … Instead we read a lot about mechanisms which should cope with consumer problems. But what are the consumer problems? We are amazed to find reference to the OECD financial education guidelines which primarily blame the consumer for all the bad things the crisis brought about. It requires “consumer capability” instead of supplier capability which the subprime products of the crisis have severely put in question. Where is any mention of linked insurance products, where is usury? Where is a word on consumer insolvency? Consumer International claims to have worked in the group. They indeed criticise the omission of overindebtedness but is this all?
Questionable legitimacy, representativeness, and the need for further stakeholder conferences
Most surveyed countries responded that the High Level Principles of the G20/OECD were a good starting point and the recommendation cites them to be considered. But did they truly read them?
If we look at our principles of responsible credit (http://www.responsible-credit.net/index.php?id=2516 ) we find a lot reflected in the G20/OECD principles but nearly nothing can be found in the UNCTAD ones.
There is truly a need for a continuation of the international financial services and consumer protection conferences. UNCTAD could sponsor it. But who is UNCTAD? Banks, state, consumer organisations, science?
The big question arises whether the place where all these ideas are developed, and where World Bank and UN cite and cross reference each other, has an influence on its representativeness. What we presently need is a well-structured set of principles that starts with general principles for all financial services, and special ones for each area (credit, savings/pension, insurance, payment services). The principles should be related to the dominant problems in the world and not only to its ideologies. It should give hints on how a responsible economy can be built up and give up the eternal thinking that if only consumers are made perfect, will the market economy be able to solve all problems for us.
In the Commentary document attached at the bottom of the page, we highlight the pertinent aspects of the Draft Principles as well as the preparatory report with regard to consumer protection in financial services.
ECRC coalition partner.
While Consumers International congratulates itself for the achievement in updating the Consumer Principles, which contains financial services for the first time (Inclusion of over-indebtedness in collective actions for redress; and Provisions for remittances, responsible lending, deposit insurance, and social inclusion) , we nevertheless regret that these principles are far from what real consumer protection we should aspire to (see the ECRC comments above).
Extracts from the news from Consumers International
Thursday, 16 July 2015
UN Guidelines breakthrough
Last week a final draft of the UN Guidelines for Consumer Protection was agreed in Geneva.
The draft text will strengthen and update the Guidelines to help ensure they remain the important international instrument to enhance consumer protection around the world.
Consumers International was at the heart of the action. On behalf of our Members, we have played a central role in the revision process over the last three years; ensuring the Guidelines are fit for today’s consumers.
Big wins include proposals to create an Intergovernmental Group of Experts (IGE) to support and monitor the effective implementation of the Guidelines; new guidance on electronic commerce, financial services, public utilities, good business practices, international cooperation, the inclusion of parity of treatment between online and offline consumers, and protection of consumer privacy.
The draft text will be presented for adoption by the UN General Assembly later this year. First adopted in 1985, the Guidelines are effectively the blueprint for consumer protection around the world.
What you can do
1. Read my blog to find out what happened at the meeting.
2. View our news piece to find out what this means for consumers.
3. See our list of 10 key improvements to the revised text.
CI Members have played a central role in the revision of the UN Guidelines for nearly three years, contributing detailed comments and recommendations at every step of the way. The revision was long overdue. The majority of the Guidelines were written before 1985. The new text allows the Guidelines to remain the ground breaking international instrument to strengthen and enhance consumer protection globally. CI was particularly pleased with the high level of commitment to establish an IGE to support and monitor implementation of the Guidelines, seen as key to ensuring effective application. Failure to include Access to Knowledge and responsible marketing in specific sectors such as food, drink and tobacco, are major omissions and issues.
UN Guidelines breakthrough: A big step forward for consumer protection
Big wins for consumers include proposals to:
- Create an Intergovernmental Group of Experts (IGE) on consumer protection law and policy to monitor the implementation of the Guidelines, serve as a forum for exchange of best practices and provide technical cooperation and capacity building to developing countries and economies in transition;
- Add guidance on electronic commerce, financial services, public utilities, good business practices and international cooperation;
- Include parity of treatment between online and offline consumers and protection of consumer privacy.
SUMMARY OF CI’s COMMENTS ON THE FINAL DRAFT OF THE UN GUIDELINES RESOLUTION
The final draft of the revised UN Guidelines for Consumer Protection announced on 9 July 2015, includes several key points that Consumers International (CI) raised in the 2012 and 2013 UNCTAD meetings and subsequently. On behalf of our Members CI has played an essential role throughout the revision process. Over the last three years we have pushed to ensure the revised Guidelines are fit for the future. It is very encouraging to see that a number of points which we included in our detailed recommendations in July 2013 have been accepted in some form.
These include improvements in the following areas:
1) Declaration of parity of consumer protection between online and off line transactions;
2) The inclusion of mobile transactions in the section on e-commerce;
3) Inclusion of over-indebtedness in collective actions for redress;
4) The inclusion in the section on Financial services, of provisions for remittances, responsible lending, deposit insurance, and social inclusion;
5) The inclusion of consumer privacy both in the text of the Preamble and in the text of the guidelines;
6) The development of international institutional machinery within the UN for the promotion of international cooperation and the monitoring of the application of the UNGCP by member states;
7) Extension of the UNGCP to state-owned enterprises;
8) Inclusion of access to essential goods and services as a new legitimate need;
9) Recognition of the desirability of the goal of universal access to public utility services, in particular, energy;
10) The inclusion of travel and tourism;
There are also some disappointments, in two areas in particular:
Abusive advertising / irresponsible marketing: CI had recommended the inclusion of guidance of adoption of: “specific measures concerning control of advertising and marketing where consumers are in particular need of protection, especially in the cases of addictive products such as tobacco and alcohol, or where consumers are susceptible to manipulation such as through marketing of food and drink to children especially in relation to unhealthy food.”
Access to Knowledge (A2K): In January 2015 CI recommended the following text: “Member states should promote the offer of digital content products in terms no less favourable than for other forms of content. Licenses should allow consumers to time, space and format shift digital content products taking into account applicable national laws and international treaties, in particular those that allow for ‘fair use’ and ‘private use’.”
Revision of the UN guidelines
See the UN pages (link below) to know more about the UNCTAD consultation on the revision of the United Nations Guidelines on Consumer Protection (UNGCP). The Second Ad Hoc Expert Group Meeting on Consumer Protection (11-12 July 2013) served to review UNCTAD's Implementation Report. Experts called for an implementation and control mechanism of the UNGCP. The future revision was conducted by Working groups. The chairmanship of each working group is as follows: E-commerce (France), Financial Services (Malaysia), Other issues (Brazil & Germany) and Implementation of UNGCP (Gabon). The latest documents are: Draft Resolution on Consumer Protection for consideration by the General Assembly 17 Jun 2015
The questionnaire used was the following: Questionnaire: Working Group on Financial Services 27 Mar 2014.