Financial consumer protection

A comprehensive policy framework for financial consumer protection can help protect financial consumers from potential detriment. As the international standard for financial consumer protection, the G20/OECD High-Level Principles on Financial Consumer Protection set out the components that countries should consider when developing a financial consumer protection regulatory framework. They also offer a roadmap for countries aiming to improve their existing policies and regulations. The Principles are cross-sectoral in nature and can be applied to the credit, banking, payments, insurance, pensions and investment sectors.

Consumers of financial products and services face a complex landscape with a range of evolving issues, opportunities and risks. It is therefore critical that policy makers identify and monitor emerging risks and co-operate on approaches to address them.  

The most significant risks arising from the conduct of financial institutions include: fees and poor-value financial products and services, ineffective disclosures and dishonest sales practices, and inappropriate financial advice and failure to assess whether a product is suitable for a particular consumer.

The most significant risks stemming from the characteristics and circumstances of consumers include: lack of financial literacy, over-indebtedness - exacerbated by inflation, high interest rates and new forms of credit - and lack of digital capability.

The most significant risks caused by the broader operating environment include: inflation and rising interest rates, financial scams and frauds, and new business models and digital innovation. 

The OECD Working Party on Financial Consumer Protection, Education and Inclusion serves as a forum for policy makers to exchange perspectives on current and emerging risks and opportunities facing financial consumers, to develop standards and policy guidance, and to collect data.

Vulnerable consumers are those who, due to personal circumstances or external factors, are more likely to experience harm when engaging with financial products and services. Vulnerability can stem from characteristics such as age, income, health, or digital literacy, as well as from life events, systemic barriers, or broader economic shocks. Importantly, the way financial markets operate—including the design of products, delivery channels, and the conduct of firms—can exacerbate vulnerability or create new risks for consumers.

One way to support consumers facing vulnerability is through access to consumer protection hardship arrangements. The COVID-19 pandemic clearly highlighted the importance of such measures for consumers in financial distress. These arrangements proved most effective when implemented rapidly and with flexibility, offering short-term relief to ease the impact of emergency situations.

The OECD report Understanding and Responding to Financial Consumer Vulnerability aims to help policymakers and regulators better define and address consumer vulnerability in the context of financial services. This report provides a conceptual framework for understanding financial consumer vulnerability and highlights how jurisdictions are addressing this issue and mitigating the risk of consumer harm.