Promoting transparent, inclusive and equitable provision of financial products and services is an integral part of financial inclusion. Consequently, developing and emerging country policymakers committed to recognize “consumer protection and empowerment as key pillars of financial inclusion efforts to ensure that all people are included in their country’s financial sector” when they endorsed the Maya Declaration in 2011. The work of the Consumer Empowerment and Market Conduct (CEMC) Working Group of AFI indeed reflects the realization of the importance of empowerment and protection of financial consumers in securing access to financial services and improving their quality.
Taking a fresh look at the terminology we are using it may be worth asking what are we missing when we put such a strong emphasis on the term consumer? We all agree that financial inclusion is about making good quality financial services available to disadvantaged and low-income groups at an affordable cost. Further, we also agree that these services include savings, deposits, credit, payments and remittance facilities. Who are the users of these services?
“Consumer protection” is a long-standing term. It is broad as it suggests that consumers in financial markets – the financial consumers – are “consuming” a range of financial services. However, these financial consumers include different types of users, i.e. we are talking about investors, savers, and consumers in the actual and common sense of the word. With financial inclusion being defined as a broader notion incorporating both the supply and demand side of financial markets, we therefore appear to be faced with a ‘protection gap’. Look up the term ‘consumer protection’ online and you are presented with services, agencies and organizations whose focus rarely includes anything beyond the traditional definition of a consumer as an end user. Who then is thinking about the protection and empowerment of the other users?
There is power in words and we often can place unconscious limitations on ourselves and how we think about an issue, because of labels we have adopted. Perhaps then, it is time to use a more inclusive terminology which clearly reflects the key issue of empowering investors, savers, and consumers as the users of financial services while protecting them through proper market conduct, as a prerequisite for transparent, inclusive and equitable provision of financial products.
Our work will have an impact on more than just consumers and it is broader than just basic protections. What we are seeking is a way to recognize the power of financial inclusion to empower everyone involved in our modern financial system while still providing market conduct guidelines to ensure that power is wisely and effectively applied.
What is most important is that we ensure the terminology we use to describe our work continues to reflect the inclusive nature of our network. Perhaps it is time to consider ‘financial empowerment’ as more central part of our terminology.
ABOUT THE AUTHORS
Alfred Hannig is the Executive Director of the Alliance for Financial Inclusion. Eliki Boletawa is the Team Leader, Policy Working Group Management, at the Alliance for Financial Inclusion (AFI). Follow Eliki on Twitter at: @pasifika_eb.
Categories: Consumer Empowerment and Market Conduct