Three, the ebbing of the pandemic could lead to a bigger surge in business and household spending than currently expected, reflecting pent-up demand. A third feature of the global economic recovery is that downside risks remain significant. The main downside risk is the emergence of more infectious or lethal virus mutations. Even if most countries can vaccinate their populations and significantly reduce the incidence of the virus, continued spread in the remaining countries may offer a rich environment for the emergence of new virus variants. If a variant emerges that proves resilient to the vaccine, the world is at risk of sliding back into widespread lockdowns, with their associated impact on economic activity. No country is safe until all countries are safe. Another source of downside risk is a sharp pick-up in inflation in the US. US consumer price inflation reached a stronger than expected 5% year-on-year in May, the highest rate since 2008. The rise in inflation reflects transitory factors to a significant degree, especially base effects from last year. US policymakers expect inflation to ease by the end of this year. The rapid pace of economic recovery in the US has, however, tilted the balance of risks towards a pronounced and persistent rise in prices. If the pandemic has caused some scarring of the economy, there may not be much spare capacity to absorb the sharp pick-up in demand. Signs that the inflation momentum was becoming too strong could force the Federal Reserve to withdraw policy accommodation sooner than currently indicated or expected.

The establishment of the complaints unit by insurers and takaful operators is expected to promote a more pro-active approach in the management of complaints. Such consumer complaints also provide valuable information regarding any shortcoming in the products and services. Responding to consumer complaints also promotes customer goodwill. Certainly, as consumer awareness and financial literacy increases with the implementation of this Consumer Education Programme, it is essential for financial service providers to recognise the opportunity to build customer loyalty and increase customer retention through this mechanism. Ladies and Gentlemen, The advent of new technology and other market innovations will bring new challenges and possibilities for businesses and consumers. We can expect that this pace of change in the financial services industry will continue to increase. In striving to adjust to these changes, we should not underestimate the significant improvements in financial and business practices that can be achieved by empowering consumers through education. BIS Review 38/2003  3  As we continue on this drive to raise the standards of individual economic and financial well-being through consumer education, the broad involvement of all parties involved in every stage of the programme’s implementation is vital to encourage expanded linkages between business and consumer education on an ongoing basis. Our success in this important endeavour will have a significant bearing on how well prepared our society is to meet the challenges of an increasingly dynamic and complex financial environment.