# _Strengthen Consumer Protection_

**Consumer protection is increasingly important as access increases** , so that new customers, and existing customers with access to new services, can take well informed decisions about how best to manage and use financial services. New providers and delivery mechanisms also open up scope for consumer fraud and abuse, as well as to unintentional errors. The G20 Principles call for „clear and transparent consumer protection regulations that require transparency in pricing and services; identify the parties ultimately responsible for upholding the protections; define supervisory authority; and ensure effective means of dispute resolution and redress are in place.‟

**Consumer laws and regulations are needed:** i) to protect against unfair or deceptive practices, including in advertising and selling financial products, and collecting loan repayments, ii) to improve transparency through disclosure and plain language requirements for products and pricing, in a way that allows consumers to easily compare offers of financial products (for example publication of comparable loan or remittance transfer rates), and iii) to establish a low cost, efficient, and fair mechanism for resolving customer complaints and disputes. (CGAP and World Bank Financial Access 2010)  A dedicated agency, or unit within the financial regulator, is needed to ensure a well coordinated and effective approach.  Disclosure and redress are at the center of consumer protection, as a primary objective of consumer protection in financial services is to compensate for the imbalance of information, power and resources between consumers and financial institutions. (S Rutledge, pers. comm.)

# **3. Strengthen Financial Infrastructure for Financial Inclusion**

**Financial infrastructure improvements reduce the information asymmetry that constrains access to credit and raises the costs and risk of financial intermediation** .  Reforming secured transactions laws and collateral registries can make the use of collateral more feasible, particularly the kind of lower value movable collateral that is more suited to microenterprise loans. Improving credit information sharing systems, and including microfinance providers, enables microfinance providers to make use of more efficient credit scoring technologies that allow them to lower costs, risks, and loan pricing.

**Regulated financial entities should be required to share credit information,** ideally through national credit bureaus rather than only through narrow microfinance information-sharing systems. Sharing borrower information is key to lowering costs and overcoming information constraints. By integrating microfinance borrower information into credit bureaus, the coverage and utility of data in the credit bureaus can be improved.  Financial institutions of all types can extend access to new customers, while managing risks and costs more effectively.   Government intervention or encouragement may be needed to ensure that pricing by monopolistic credit bureaus is accessible for microfinance institutions. Lower pricing for loans below a certain size, may be needed to avoid passing on disproportionately high costs to borrowers. The Moroccan

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