It is important to stress that often these departments also perform a number of other functions. In 31 countries, consumer protection work is assigned to a financial institution supervision department. In Austria, Botswana, Kenya, Macedonia, and Sri Lanka consumer protection is part of routine supervisory work with no organizational separation of consumer protection tasks from supervision activities. Philippines, Spain, Brazil, Israel, and Zimbabwe have a dedicated team or unit within the banking supervision department that handles consumer protection. An alternative approach taken by 13 countries is to create a dedicated department. In Czech Republic, the Consumer Protection Department reports directly to the Board of the Czech National Bank; in Ecuador the department reports directly to the Bank Superintendent.

The survey asked a number of questions on enforcement powers available to the regulators and on monitoring methods they use to ensure compliance. The responses indicate that enforcement powers are often limited. Figure 7 plots the availability of different alternatives for the regulators in cases of non-compliance with consumer protection laws by the financial institutions. Regulators in around 50-60 percent of the countries have powers to issue warnings to financial institutions or impose fines and penalties for violation of consumer protection regulations, and about a third are empowered to issue a public notice of violation, require providers to refund excess charges or withdraw a license to operate. In a number of countries, even though the agency had the responsibility to monitor compliance with consumer protection regulations, the respondents stated that they were only authorized to take action if the violations posed a risk to financial stability, significantly limiting the regulator’s ability to take action.

The respondents in the survey were also asked to provide the number of times each of the enforcement actions was taken. Unfortunately a small number of countries provided these data, partially due to weak monitoring systems discussed further in the section. Only about a quarter of regulators with the authority to take action against violations of consumer protection provisions provided statistics on the number of times they took these actions. Among these, only half issued more than 5 warnings and about a half imposed fines in 7 or more instances. Only Italy, Japan, Lithuania, Nicaragua, Slovenia and the United Kingdom report more than one case of issuing a public notice of violation. “Naming and shaming” is potentially the most powerful tool of a regulator. A recent study by the Office of Fair Trading (2009) of the U.K., assessing consumer credit interventions, suggests that the more public the actions against violating institutions, the higher the deterrent effect will be. As many financial consumer protection regulators reform their approach, it may be useful to evaluate the scope of enforcement powers that the regulators have under the legislation.

Monitoring compliance with financial consumer protection regulations is an essential element of effective implementation of the legislation. The survey responses indicate that no more than half of financial regulators monitor compliance through proactive means such as monitoring 12