Consumer rights: The importance of ensuring the protection of every financial consumer in the digital age |19 March 2022
The rapid pace of technological advances is changing how people live, work, conduct business, interact and provide solutions to some of the world’s challenges. This rise in technology is also changing the financial services landscape, which is crucial to the functioning of the economy.
Many countries have been observing the shift from traditional methods of payments such as cash and cheques to more innovative applications and products that are revolutionising the provision of financial services across the globe. The Covid-19 pandemic has further amplified this trend.
According to Juniper Research, a UK-based company that specialises in identifying and appraising new high growth market sectors within the digital ecosystem globally, the total number of digital banking users will exceed 3.6 billion by 2024, up from 2.4 billion in 2020; representing a 54% increase.
From a Seychelles perspective, the below graph showcases the uptake of various digital financial services, namely the Seychelles Electronic Funds Transfer (SEFT), Point of Sales (POS), mobile and internet banking from 2019 to 2021.
The increasing trend over the last two years can be linked to new developments within the financial sector as well as the emphasis on limiting movement and face to face transactions in view of the ongoing pandemic.
As the digital financial transformation is evidently here to stay, it is important to recognise that while digital financial services present ample opportunities, they also pose certain risks that may negatively impact consumers, particularly the more vulnerable groups.
Therefore, it is very fitting that Consumers International, which brings together consumer groups globally, has initiated a conversation about this reality by choosing Fair Digital Finance as the theme for this year’s World Consumer Rights Day, celebrated earlier this week on March 15.
The theme presents the perfect opportunity for Seychelles to also make this reflection now that the country has embarked on a digitalisation journey, where the government is pushing forward with the digital economy agenda in collaboration with relevant stakeholders. This endeavour recognises the importance of digital improvements and innovation in contributing to economic diversification and increasing productivity.
In line with this agenda, the Central Bank of Seychelles (CBS) is playing a fundamental role in implementing the National Payment System Modernisation Plan and the Seychelles Fintech Strategy. These initiatives are expected to bring numerous benefits for the country, including increased access to financial services, more convenient, affordable, secure, efficient and reliable products and services and increased innovations.
In parallel, it is important to increase efforts to improve financial literacy and mitigate pertinent risks such as frauds and scams, data theft, privacy breaches, amongst other potential threats. This is where financial consumer protection becomes vital.
What is financial consumer protection?
Financial consumer protection encompasses the laws, regulations and institutional arrangements that provide a safeguard for consumers to be treated equitably, honestly and fairly at all stages of their relationship with financial service providers. This helps ensure that consumers have access to financial services and can make informed decisions, address any complaint and find necessary redress, which can build trust in the financial sector, contributing to healthy, competitive financial markets and financial stability.
Financial education ambassadors’ perspective on financial consumer protection
“It enables you to make the best choices based on your interests and prevents you from being misled,” ‒ Aliché Houareau.
“Financial consumers should know their rights to better understand the process of handling their money, to know if they are investing their money wisely and most importantly if they are getting value for their money. This will enable them to make better choices regarding their interest and financial goals,” ‒ Isa Gamatis-Henriette.
“It is important for consumers to know their rights to make an informed decision and avoid being misled,”‒ Elaine Naiken.
“Knowing your rights as a consumer is an important step in managing the ever-increasing risks in the digital space,”‒ Keith Mondon.
Financial consumer protection in Seychelles
Currently, the Fair Trading Commission (FTC) has the overall mandate for consumer protection, guided by the Consumer Protection Act, 2010.
Given the specificities of financial services and products, the CBS and the Financial Services Authority (FSA) have established processes that guide the way consumers can address complaints against any financial institutions supervised by the two authorities.
With financial consumer protection becoming increasingly important globally, the local authorities have recognised the need to strengthen the domestic legal framework. In this regard, the Cabinet of Ministers recently approved the Financial Consumer Protection Bill, which is due to be presented to the National Assembly. The proposed law will be administered jointly by the CBS and FSA.
Contributed