Open letter written to G20 Finance Ministers Demand a global body for consumer protection
Consumers International, a body that represents 220 consumer organisations across 115 countries worldwide, has written an open letter to the Finance Ministers of the G20 countries protesting against “inadequate agenda” on financial consumer protection. The G20 summit began in Paris in Friday.
The jointly signed letter reminds the Ministers that weak consumer protection in the form of irresponsible mortgage lending will only act as a catalyst to the impending financial crisis.
CUTS International secretary-general Pradeep S. Mehta and Mumbai Grahak Panchayat chairman Shirish Deshpande are signatories to this letter along with Consumers International President James A. Guest and the leaders of other consumer organizations.
The proposals for financial consumer protection being considered by the G20 Finance Ministers “fall short of what is required,” the letter says.
In September 2010 Consumers International, along with consumer organisations in all G20 countries, launched the ‘Consumers for Fair Financial Services’ campaign seeking urgent action on consumers’ financial protection. Following this, the G20 leaders who met in Seoul in November 2010 requested the Financial Stability Board (FSB) to report on options to enhance protection in consumer finance, or credit. Thereafter the G20 Finance Ministers also requested the Organization for Economic Cooperation and Development (OECD) to develop a set of “high-level principles on financial consumer protection”.
Both proposals will now be presented to the G20 Finance Ministers in Paris and to the G20 leaders in November. Consumers International is mainly disappointed over the fact that key demands are not included in the final submission.
“The global consumer rights movement believes crucial omissions in the new G20 proposals, to be considered in the meeting, will mean they do little to improve protection for consumers from bank failures and will fail to remove risky mortgages and poor credit services from the market,” the letter states.
“The proposals do not include any explicit reference to deposit guarantees in the event of bank failures, nor do [they] support the adoption of minimum standards for financial products.” Consumers International believes these are crucial steps for avoiding any future financial crises.
Consumers International has also sought the support of the G20 leaders for establishment of a new international organisation to champion financial consumer protection in banking and provision of credit.
The organisation will most likely be based on the existing network of national financial consumer protection agencies with an independent consumer panel monitoring and advising it.
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