Financial Consumer Protection at a Glance
Financial Consumer protection is defined as the state whereby the rights of consumers of financial services are preserved through a clear legislative framework that identifies the relationship between providers of financial and banking services and their customers to ensure the consumers’ rights in terms of fairness, transparency, as well as protecting their rights when complaining. In addition, financial consumer protection involves raising consumers’ awareness and enabling them to take well-informed financial decisions through encouraging them to improve their knowledge and skills needed to manage their assets.
The financial consumer protection is a key element to achieve financial inclusion; as having a comprehensive framework for financial consumer protection leads to boosting confidence and competitiveness in the financial and banking system; thus improving the quality of financial services provided to customers, in addition to its contribution to encouraging individuals and increasing their access to financial services. Furthermore, lack of measures that protect consumers of financial sector, will expose them to unfair sales and collection practices, as well as accessing inappropriate financial services which may adversely affect their interests. This requires a system for financial consumer protection that would consider and achieve the following principles (a proper designing and providing of products, avoiding excessive indebtedness, transparency, responsible pricing, fair treatment of consumers, privacy of customers’ information, and mechanisms for dispute resolution). Furthermore, the system will also take into consideration customers' needs, especially those who lack the necessary financial education.
In the context of the Central Bank of Jordan's keenness to promote transparency and fairness principles in treating customers, which enhance competitiveness in the banking sector and contribute to protecting banks and financial institutions from reputation and legal risks, and to ensure a sound and stable retail sector, the CBJ has done the following:
Issuing "Instructions on Dealing with Customers fairly and transparently" no. (56/2012) dated 31/10/2012
and was enforced in May, 2013. Such instructions have tackled a number of issues including: (1) transparency and credit controls of retail portfolio (2) limits on certain commissions and fees on banking services (3) protecting customers' dormant accounts and (4) effectively solving consumers’ complaints. These instructions have obliged banks to establish a separate unit for complaints handling which is related to the compliance department (to ensure neutrality and independence). The unit should be furnished with a well-trained and qualified staff, in addition to set clear guidelines for handling consumers’ complaints and amending measures in case of non-compliance with effective instructions and/ or the bank's internal policies.
Amending the CBJ's Law to expand the scope of its functions to include the following :
Launching "Financial Consumer Protection" department and establishing its organizational framework.
This department will be responsible for raising public awareness on banking and financial services, as well as setting the standards required to promote transparency and fairness in treating customers of financial institutions supervised by the CBJ. This will enhance competitiveness among these institutions, contribute to protecting them from reputation and legal risks, and ensure their contribution to the sustainable economic development and financial system stability, as well as protecting the consumers of financial institutions.