While regulators have an important role in promoting consumer protection and education, it is equally important to galvanise support and collaboration from all market participants - financial service  2  BIS Review 86/2005  providers, government agencies, educators and consumer associations and community-based organisations, toward effective implementation of the initiatives. Let me take this opportunity to share with you the experience of Malaysia in promoting consumer protection and education. The Malaysian economy has transitioned from a production-based economy towards a knowledge-driven economy, with small and medium sized enterprises (SMEs) assuming an increasingly significant role in the economy. The financial sector has also evolved accordingly to facilitate this economic transformation process, with a growing trend towards greater deregulation and market orientation. To achieve a more efficient, competitive and resilient financial system, Malaysia has formulated a blueprint that outlines the roadmap for the development of the financial sector. The Financial Sector Master Plan which was issued in 2001 outlines the key strategies for the development of the financial sector. Amongst the important strategies implemented has been the development of the consumer protection framework and the enabling infrastructure to protect consumers' interests while at the same time to enhance their financial capability to participate effectively in the financial system. Bank Negara Malaysia has adopted a multi-pronged approach in empowering consumers. As a central bank in an emerging market economy, our mandate is broader than our counterparts in the more advanced and mature economies. We have the important role of developing the financial sectors.

Specifically there is asymmetry in the access to information and bargaining power between the consumers and financial service providers. These imbalances can be addressed by three mutually reinforcing strategies. Firstly, promoting stronger transparency and disclosure standards in financial institutions; secondly strengthening the mechanisms for consumer protection; and thirdly enhancing consumer education. An increasing number of countries have undertaken this more comprehensive approach in order to give greater focus to consumer protection issues for ensuring the soundness of financial service providers and ultimately to the stability of the financial system. This will also in turn promote more effective consumer participation in the economy, thus contributing more significantly to the economic growth and development process. The approach and mechanisms adopted to protect consumers in individual jurisdictions will vary from one country to another, given the unique characteristics prevailing in the different respective economies and financial systems. Consideration of country-specific circumstances and contextualisation is important to evolve relevant and effective consumer protection and education infrastructures. Individual countries need to customise the consumer protection and education framework to their environment, taking into account factors such as the stage of economic and regulatory development, the structure of the financial system and the level of consumer sophistication. BIS Review 86/2005  1  Prudential safety and soundness, competition and consumer protection need to co-exist to effectively serve the various stakeholders' interests. Hence, implementing an effective consumer protection and education framework involves achieving an appropriate balance between providing adequate safety for consumers while promoting competition and financial innovation.