Financial education and consumer protection

OECD G20 Conference on Financial Consumer Protection


Opening Remarks by Angel Gurría, OECD Secretary-General


OECD Conference Centre, 14th October 2011

Minister Baroin, Ministers, Governors, Ambassadors, Ladies and Gentlemen,

I would first like to welcome all of you here today to the OECD. I would like to thank Minister Baroin for jointly opening this conference with me but perhaps more importantly, for France’s leadership and commitment towards supporting the work of the G20 on financial consumer protection.

The global financial crisis has been a catalyst for developing new rules of the game to address financial governance and risks. Significant progress has been achieved but the global situation is far from solved, yet. Banks were and still are at the core of the problem.

While this unfinished agenda is being addressed, there has been growing realisation too that more attention is needed on understanding the impact of the financial crisis on households and individual consumers, or to put it another way, for the citizens of the G20 themselves. Let’s not forget that on a day to day level, it has been individual households that have had to bear the brunt of the consequences of a financial crisis, which was at the onset a mortgage crisis.

The market for financial services and products has certainly provided benefits to financial retail consumers. But the growth and development of the financial sector has been also accompanied by more sophisticated and complex market structures. It is likely that most ordinary customers do not understand how these financial products work. This is not necessarily a problem: you’re not going to abstain from buying a car because you do not know exactly “how” it functions. The difference with financial instruments is that sometimes consumers are also a long way from grasping the “what’s next”, that is,  the future financial obligations that will stem from these products.

In such an environment, vulnerable consumers, in both advanced and emerging economies alike, can be exposed to unsuitable offers and unfair sales practices.  Absent some reasonable level of assurance that their interests will be protected, consumers will lack the confidence they need to participate in the financial economy. This is the role of national authorities to ensure that an appropriate regulatory framework for financial consumer protection is in place. And this has been the rationale behind the design of the principles on financial consumer protection - which the OECD developed for the G20.

Thanks to its global networks, the International Network on Financial Education and the Task Force on Financial consumer protection, our Organisation was very well placed to oversee the development of the G20 principles requested by G20 Ministers of Finance in Paris last February.

In so doing, the Task Force worked in close cooperation with all G20, FSB and OECD members, international organisations and standard setting bodies. We had numerous consultations with consumer and industry associations. I am proud that we succeeded to deliver despite tight deadlines and constraints. I would wish to thank all stakeholders – to thank you - who actively contributed to this outcome.

This morning’s seminar is about giving financial consumer protection the recognition and emphasis it rightly deserves. The High-Level Principles on Financial Consumer Protection will be noted at the G20 Finance and Central Bank Governors meeting.  But let me remind you that consumer protection is part of a broader picture that should include prevention and education, and we believe that the G20 should continue putting an emphasis, not only on implementing the principles, but on forthcoming financial education issues.

Thank you.



Closing Remarks by Angel Gurría, OECD Secretary-General

I would first like to thank Mr Redouin for his comments and for his participation here today.
The ongoing crisis illustrates all too well the importance of trust and confidence for the proper functioning of our financial systems and, in turn, our economies. Consumers are at the heart of the system. They should feel capable, knowledgeable, safe and secure in their dealings with financial services providers and their intermediaries.

Financial consumer protection is an integral part of that process. But it should not be seen as a standalone policy.  Financial consumer protection, as we have heard this morning, works best when accompanied by policies that promote access to affordable and appropriate financial products and services and through support for financial education and literacy interventions.  These three pillars – protection, access, and education – should be integrated in the broader regulatory framework, alongside prudential regulation, governance and competition policies.  The challenge is in finding the right balance. How do we strengthen financial consumer protection, regulation and supervision without stifling competition, innovation and access in the market? How does this work at the level of individual jurisdictions?  What role can international organisation play in promoting a better understanding of the issues involved and learning from best practice?

I firmly believe that we have made a good start through the leadership of the G20. But it is clear that more needs to be done. We at the OECD are willing and able to play our role in that process, providing high level, evidenced based policy advice and we look forward to discussing these issues with our members and international partners as cooperation is the key to fostering global economic growth and prosperiety.

Effective financial consumer protection will to help restore trust and confidence in well-functioning markets for financial products and services. Without consumer trust and confidence we could jeopardise the basis for gobal economic recovery and growth.  While the financial crisis has been the catalyst these issues concern both advanced and emerging economies as we work to remove obstacles, restrictions and distortions in the market place.

It has been a remarkable morning. What I find most refreshing is the intensity of the discussions, a sense of purpose and belief that lasting change can be made for the better.

I would like to give a special thanks to all the speakers; panel members and moderators, for making today’s discussions so productive.
Thank you all again.



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