A guest article from the Financial Consumer Relations Department, Central Bank of Sri Lanka

A strong financial system is built not only on stable institutions, but also on the confidence and trust of the people it serves. Recognizing this, the Central Bank of Sri Lanka (CBSL) has steadily strengthened its commitment to protecting financial consumers and promoting fair treatment across the financial sector.

The journey began during a period of significant economic challenges, when CBSL observed a sharp increase in complaints and concerns raised by financial consumers. To address these issues and provide consumers with a dedicated channel for redress, the Financial Consumer Relations Department (FCRD) was established in 2020. Initially, the Department focused on resolving consumer complaints and fostering better engagement between consumers and financial institutions. However, CBSL soon recognized that effective consumer protection required more than responding to complaints after problems arise. It required a framework that could prevent harm, promote fair conduct, and place consumers at the center of financial sector regulation.

This vision became a reality in 2023, with the introduction of the Financial Consumer Protection Regulation. The Regulation marked a shift from a reactive approach to a proactive and comprehensive consumer protection framework. Built on the principles of fairness, transparency, accessibility, responsible conduct, and effective complaint resolution, the FCPR established clear expectations for financial institutions while strengthening safeguards for consumers. More importantly, it signaled CBSL’s commitment to ensuring that every consumer is treated fairly and has access to transparent and responsible financial services.

To bring these principles into practice, in 2024, CBSL introduced a proactive and risk-based supervisory approach, focused on identifying and addressing consumer protection risks before they cause widespread harm. Using a comprehensive risk assessment framework, supervisory efforts were directed towards institutions and activities that posed higher risks to financial consumers. As part of these initiatives, CBSL has so far conducted five full-scope examinations of licensed banks and finance companies, to assess the effectiveness of their consumer protection frameworks, governance practices, disclosures, and complaint-handling mechanisms.

In addition, CBSL carried out thematic reviews into key areas that affect consumer well-being, notably loan interest rates, digital financial products, credit card operations, minor accounts, early settlement procedures for term loans, and the Parate execution process of loans. CBSL also conducted two spot examinations in response to specific consumer complaints, allowing timely supervisory intervention where needed.

These supervisory activities have played a crucial role in identifying areas requiring stronger consumer safeguards, improving industry practices, and informing future regulatory and policy developments. More importantly, they have helped ensure that financial institutions place greater emphasis on transparency, accountability, and the fair treatment of consumers.

Today, financial consumer protection stands as a key pillar of CBSL’s mandate. From establishing a dedicated consumer relations function to introducing Sri Lanka’s first comprehensive consumer protection regulation and implementing risk-based supervision, CBSL has continuously strengthened its efforts to create a more consumer-focused financial sector. As financial services continue to evolve, CBSL remains committed to protecting the interests of consumers, enhancing financial inclusion, and fostering a financial system that is fair, trustworthy, and accessible to all.

Our Journey at a Glance

• 2020: Establishment of the Financial Consumer Relations Department (FCRD), providing consumers with a dedicated avenue to seek assistance and resolve financial grievances.
• 2023: Introduction of the Financial Consumer Protection Regulation (FCPR), creating a comprehensive framework for the fair treatment and protection of consumers.
• 2024: Risk-Based Supervision – Proactively identifying and addressing emerging consumer protection risks.
• Five Full-Scope Examinations – Assessing consumer protection practices in Licensed Banks and Licensed Finance Companies.
• Six Thematic Reviews – Focusing on key areas affecting consumers, including loans, digital financial services, credit cards, and deposit products.
• Two Spot Examinations – Responding swiftly to emerging consumer concerns and complaints.
• Continuing the Mission – Building a fairer, more transparent, and consumer-centric financial sector that inspires trust and confidence among all Sri Lankans.