FINANCIAL CONSUMER PROTECTION AND FINANCIAL LITERACY IN ASIA AND THE PACIFIC 2021

Hi Friends, at the end of 2021, OJK together with OECD held a conference as a forum to discuss global policy developments and perspectives on financial inclusion, financial consumer protection, and financial education policies for consumer empowerment. The Organization for Economic Co-operation and Development (OECD) is an international organization that has the vision to create a better life through various economic policies, especially in its member countries.

The organization, headquartered in Paris, has a mission to promote policies that improve the economic and social well-being of people around the world. Against the backdrop of the COVID-19 pandemic, This conference will pay special attention to the growing digitalization of finance and policies that support the financial resilience of individuals, households, and Micro, Small, and Medium Enterprises (MSMEs) in the face of the COVID-19 pandemic. In this conference there are four important issues to be discussed, namely:

  • Strategic review and update of the G20/OECD High-Level Principles on the Protection of Consumer Finances, the leading international standard in this field;
  • Digital financial literacy reviews can support financial resilience, during and after a pandemic;
  • Exploration of the impact of the COVID-19 pandemic on consumers’ personal financial conditions and responses to related policies; and
  • Reflection on the various approaches taken to strengthen digital financial inclusion for individuals and MSMEs in the context of the pandemic.

The COVID-19 pandemic has highlighted the need for an effective financial consumer protection framework to ensure responsible and fair treatment of consumers, especially those who may be vulnerable and need financial access support. In the first session, this conference will discuss the issue of policy developments and approaches to financial consumer protection. What is the principle of consumer protection for financial services according to the OECD? Here are some principles:

  • Fair and equitable

All consumers of financial services must be treated fairly and honestly by financial service providers.

  • Transparent

Financial service providers must provide important information to consumers regarding the financial products and services offered, including benefits, risks, product requirements, information on protection, as well as rights and obligations as consumers.

  • Education and financial literacy

Financial education and literacy are important as efforts to develop knowledge, skills, and confidence so that consumers can understand the financial risks and opportunities of a product and can take effective actions to improve their own financial well-being.

  • Protection of personal information and data

Financial information and consumer personal data must be protected. Consumers also have the right to obtain information about data access as well as to revise the data collected from financial service providers.

  • Handling complaints

By jurisdiction, complaint handling must ensure that consumers have access to complain handling that is accessible, affordable, independent, fair, accountable, timely, and efficient. The complaint mechanism may not impose costs, delays, or unreasonable burdens on consumers. In this case, the financial service provider must have a complaint handling and compensation mechanism.

Furthermore, the second session of the conference will discuss digital financial literacy in supporting financial resilience, during and after the pandemic. The COVID-19 pandemic highlights the need to focus on the financial resilience of individuals and households. At the same time, the COVID-19 pandemic has accelerated the digitalization process, both in the provision of financial services and in intervening in financial literacy programs aimed at maintaining financial resilience. Here are some of the benefits of digitizing the financial sector:

  • Expanding the potential reach and access to financial services.
  • Offers transactions that are more convenient, faster, secure, and timely.
  • Increase opportunities for interaction through more useful digital media between financial service providers and consumers.

But behind these benefits there are also inherent risks, namely:

  • The level of trust in digital financial services is less even.
  • Some groups are unable to access digital financial services, for example, parents or low-income groups who may not be able to access cellular phones (cell phones) and computers.
  • Consumers are very vulnerable to applying for excessive debt because of the ease of information technology for loan service providers.
  • Risk of theft of personal data.

For this reason, digital financial literacy is very important so that consumers can maximize the benefits of digital financial products and minimize the risks that can arise.

The third session of this conference will discuss the impact of the COVID-19 pandemic on consumers’ personal financial conditions and the last session will discuss digital financial inclusion for individuals and MSMEs in the context of the pandemic. It is undeniable that the COVID-19 pandemic has had an impact on the financial condition of individuals and MSME actors, with the perceived impact of course going to be different for each community group and economic sector. This causes every individual or business actor to adapt quickly to new conditions so that they must prioritize changes in business management and encourage various innovations. In this context, financial literacy,

That is a brief explanation of the important issues discussed at the OJK-OECD Conference on Financial Inclusion, Financial Consumer Protection, and Financial Literacy in Asia and the Pacific 2021. For that, you can join the conference online through a live broadcast on YouTube Financial Services. Don’t miss it!

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