New Delhi, November 09, 2010
As world leaders gather for G20 summit, Consumers International, which represents 220 consumer organisations in 115 countries, along with CUTS International and other consumer organisations across the world, is urgently calling for the needs of everyday consumers of financial services to be pushed to the top of the agenda, through a jointly signed open letter to G20 leaders. Pradeep S. Mehta, Secretary General, CUTS International is one of the signatories to the letter, along with leaders of other consumer organisations across the world.Poor financial consumer protection, as exemplified by US sub-prime mortgages, was a key catalyst for the financial crisis. The interconnected nature of global banking then spread the crisis rapidly from country to country, threatening livelihoods, savings and social stability. People around the world will live with the consequences for years to come.
In this context, the consumer organisation urged the world leaders to raise the issue and to support the establishment of an experts group on consumers’ financial protection during forthcoming G20 Summit.
For many consumer organisations the financial crisis highlighted what is an ongoing emergency in financial services. Consumers International’s members in large and small, rich and poor countries are dealing with complaints about financial products and services every day. And each year the global economy creates up to 150 million new consumers of financial services, many of whom are in countries where consumer protection and financial literacy are woefully inadequate.
Last month, the G20 finance ministers and central bank governors issued a statement detailing the progress they have made in finding ‘policies conducive to reducing excessive imbalances and maintaining current account imbalances at sustainable levels’. This is, of course, important but once again there is barely a mention of the consumer – a crucial element that remains conspicuous by its absence from these international discussions.
The global nature of banking means that countries around the world are now facing the same challenges, it is common sense that they work together to develop solutions. The most powerful nations in the world need to make a commitment to protect citizens from abusive financial services industry practices.
International co-operation on financial consumer protection has the potential to deliver substantial savings for individual governments. This can be achieved through the co-ordination of research, the development of standards and guidelines, the sharing of best practice and the avoidance of costly crises.
The consumer organisations across the world urgently want to see the establishment of an Experts Group on Consumer Financial Protection which would report to the G20 summit in 2011. This would be a first step to ensuring that consumers from both developed and developing nations have access to stable, fair and competitive financial services. Getting this right is not only vital to consumers, but also to the ongoing stability of the world economy.
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