financial institutions treat their retail customers—and where necessary, they should enforce the legislation. In addition, financial supervisors should review complaint files to identify which institutions receive a high number of complaints from retail customers and why—and what remedial actions are taken. One approach is to go further and have the regulators publicly file an annual report on the number of consumer complaints by financial institution and the common sources of the complaints.

**There should be one, clearly identified, central location where consumers of financial services and products can go to discuss their financial problems.** This central office should have a toll-free telephone line so that anyone from anywhere in the country can obtain information about financial services and their legal rights in case of a dispute. Consumers should also be able to submit their complaints by email, by postal mail, or by visiting the office of the complaints office. Disputes over specific cases will likely be handled by a separate redress mechanism. However consumers should have one location where they can make inquiries, obtain reliable information and be directed as to how to request resolution of a dispute.

**Different countries have different approaches to consumer complaints.** More complaints in total, however, tend to be received where all financial complaints are centralized in one office. This suggests that centralized consumer complaints offices tend to achieve the highest level of public confidence. More and more consumers will go to the trouble of submitting a complaint if there is mounting evidence of at least a reasonable assurance that a solution is being found for the issues at hand.

**Most complaints are inquiries rather than disputes.** The Diagnostic Reviews found that at least half of complaints submitted to the supervisory authorities are requests for additional background information to help consumers understand the financial services and products they purchase. In Azerbaijan, the most common complaint consumers submitted to the central bank was that they did not understand why their commercial banks failed to grant loans to them. In Croatia, consumers complained to banking supervisors that “We don’t understand what we signed”. The Diagnostic Reviews found that consumers are often confused about the terms and conditions of their financial contracts and largely unaware of the full extent of the risks inherent in the financial product or service on offer or actually acquired. The EU Consumer Credit Directive (now implemented in most EU new member states) provides a clear algebraic expression for the calculation of the annual percentage rate of charge (APR). Yet consumers often do not understand how the final rate is calculated. For example, the Diagnostic Review for Latvia noted that one of the most common forms of complaint submitted to the consumer protection authority was over calculation of the interest rate on consumer loans. Numerous consumers complained that banks unilaterally increased the interest rate on their mortgage loans. Yet investigation of the terms for those contracts showed that the contract clearly stated that the interest rate was set at a specified margin over a widely quoted reference rate, such as LIBOR or the Riga inter-bank offered rate. In such cases, the consumer had clearly not understood the terms of the contract.

**The complaints office should be able to access programs of financial education.** Where a complaint is an inquiry rather than a dispute, the office should provide consumers with access to reliable financial education resources. Responding to consumer inquiries and providing reliable information to deal with consumers’ immediate needs thus provides an excellent forum for consumer education on financial matters.

**Statistics on consumer complaints should be analyzed and published—and used to identify future improvements in the consumer protection framework.** In none of the countries of the Diagnostic Reviews were statistics on financial consumer complaints aggregated or analyzed to identify trends. Numerous agencies received consumer complaints and each tracked how many they received. However, the complaints were spread among different agencies. For example, in Romania only the insurance supervisor publishes data regarding the number of complaints received and how they are settled. In Russia, data on the number and types of complaints are published by the insurance and securities supervisors but no data is available about complaints about other types of financial services. In Bulgaria,

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