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Responsible Digital Finance
Mystery Shopping in Mexico and India
This year's Responsible Finance Forum focused for the first time on digital financial services. The Forum, held in Perth, Australia, brought together industry, government and private sector leaders to begin the hard work of identifying the risks to consumers who use digital financial services and crafting appropriate consumer protection responses.
CGAP conducted a mystery shopping study in Mexico to investigate the information and products delivered to low-income consumers. The study found that front-line financial institution staff provided limited information about pricing and fees and that clients were rarely offered the cheaper products suitable for their incomes. CGAP concluded that if front-line staff are incentivized to offer more profitable and expensive products, disclosure and transparency rules may not go far enough to protect consumers.
A mystery shopping study conducted by the Institute for Financial Management and Research (IFMR) in India similarly revealed that bank staff almost never offer clients the “no frills” bank accounts mandated by the Reserve Bank of India. These two studies highlight the ability of mystery shopping, a relatively simple tool, to provide valuable insights for consumer protection policy.
Consumer Protection in Paraguay’s National Financial Inclusion Strategy
Following a consumer protection and financial literacy review carried out by the World Bank, the Central Bank and Ministry of Finance of Paraguay adopted a National Financial Inclusion Strategy this year. The strategy assesses the current state of client protection in the country and establishes an action plan with key performance indicators and a working group for client protection. For example, one such performance indicator is that all financial institutions must have and publicize recourse mechanisms.
"Without quality, which is pushed forward in part with consumer protection, financial inclusion is incomplete.”
– David Grace (David Grace & Associates)
The Microfinance Insitutions Network (MFIN) became the first Self-Regulatory Organization recognized by the RBI in the Indian Financial
MFIN Becomes Self-Regulatory Organization in India
Sector in June 2014. In its new role, MFIN has both the authority and responsibility to regulate NBFC-MFIs to guarantee responsible finance and client protection. MFIN focuses on surveillance, grievance redressal, dispute resolution, data collection, training and knowledge dissemination in an effort to protect clients.