Do you know the 12 principles of financial consumer protection?

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Economic relations between consumers and suppliers of goods and services imply rights and duties for the parties involved. In Brazil, the Consumer Defense Code (CDC) establishes a set of rules for consumer protection. Financial services are also subject to rules that seek to protect contractors.

Between 2011 and 2012, the member countries of the OECD (Organization for Economic Cooperation and Development) and the G20 adopted a set of principles to specifically guide the protection of consumers of financial services. In this article I'll talk a little more about the principles that guide this relationship. Financial consumer protection has been defined as a set of laws and regulations to ensure fair and responsible treatment in the use of these services and in dealings with the institutions providing them.

Originally, ten principles were created. In 2022, two more were added, in view of the recent transformations that have taken place in this market. As a member of the G20, Brazil adopted the principles and was represented by Central Bank of Brazil in the process of updating the guidelines. These standards refer to financial services in general. I will highlight below those with the greatest impact on the credit market:

Inclusion and access to financial services. Inserted in the 2022 revision, the principle of inclusion says that different actors, such as governments, regulators and companies in the sector, should promote the use of financial services among consumers who face barriers to access.
Literacy and financial skills. It guides the development of strategies for consumers to make better-informed decisions about the financial services they use and about their rights and responsibilities as consumers of these services.
Competition. It represents a mechanism to stimulate greater consumer choice, with the potential to reduce the prices of financial services and encourage innovation.
Data protection. It reinforces consumers' rights over their personal data, providing for their consent in the case of information sharing.

The 12 principles of financial consumer protection

In addition to the 12 principles, three cross-cutting themes were considered relevant for implementation. Digitization is one of them, as financial life is in the palm of your hand, making it easier to use financial services. However, I would stress the importance of actions related to infrastructure, access to smartphones and digital education for the elderly, after all, in addition to the solution itself, we need to invest in the conditions for its democratization. Financial well-being and the reality of ESG have also been included among the cross-cutting themes of the consumer protection principles.

The guidelines issued by the OECD and the G20 show that the concern to improve and expand the delivery of financial services transcends borders. In Brazil, these issues have become frequent news items, driven by an agenda that prioritizes competition and financial inclusion. In the credit market in particular, initiatives such as Open Finance are guided by the principle of competition, while observing the protection of consumer data. The evolution of credit history databases, through the reformulation of the Positive Registry, has proved to be a vector for inclusion by giving visibility to consumers who have always been on the margins of the financial system.

Along with other civil society actors, the bureaus have contributed to building the agenda for modernizing the Brazilian credit market. This was the case during the debate that resulted in the General Data Protection Law (LGPD) and the Over-indebtedness Law. The sector also promotes actions to expand the financial education of Brazilians, as well as working for decades to control the risk of default.

Attention to these principles increases consumer confidence in the institutions that provide financial services. And in this market, trust is fundamental.