Consumer Empowerment and Market
Conduct Working Group (CEMCWG)

Consumer empowerment is a broad concept, which places responsibility on regulators and financial services providers to make use of easier, safer financial services and of greater benefit to consumers. Market conduct policies are used by regulators to shape, enhance and balance these three factors (i.e., the institutional framework, as well as supply-side and demand-side factors) to create a more sustainable, fair and sound financial ecosystem for consumers.

While consumer protection has often been a priority for regulators, alongside financial stability, the developments in financial services have highlighted the need for ‘strengthened, dedicated proportionate policy action to enhance financial consumer protection’. At the launch of the AFI CEMC Working Group (CEMCWG), in April 2011, it was acknowledged that expansion and innovation in products, services and technology have, undoubtedly, delivered many economic benefits –globally expanding the reach of financial services and bringing more consumers, including some who have historically struggled to access the market, into financial services. Nevertheless, the CEMCWG also recognized that the causes and effects of the 2007 global financial crisis clearly demonstrated the risk that innovation can disregard legitimate consumer needs and expectations of fair and responsible treatment by financial services firms. As a result, some consumers remain excluded from the market altogether, while others have access only to poor quality financial products or FSPs that do not treat them fairly. Renewed emphasis on consumer empowerment is often referred to as an attempt to re-balance the focus of financial services regulation towards ‘demand-side’ factors – i.e. consumer needs, behaviours and outcomes. This is viewed as both essential and timely.

CEMC regulation is viewed by policymakers and regulators – across the world and in relation to a range of different markets – as offering potential to improve outcomes for individuals, in general, and, in particular, those who are vulnerable, but also as a route to supporting economic growth by promoting and stimulating healthy competition while, at the same time, reducing the cost and burden of regulation.

CEMC policies deliver two important linked outcomes in relation to financial inclusion. First, they increase the potential for FSPs to extend access and choice to groups that are currently underserved or unserved via, for example, new products and services, alternative delivery channels or innovative technologies. Second, they have the potential to improve the quality of products available in the market to ensure that financial inclusion delivers meaningful benefit to consumers. Without this approach, consumers engaging with financial services for the first time are at significant risk of falling prey to poor quality or unsuitable products, resulting in erosion of income due to unexpected costs and charges, punitive terms and conditions, over-indebtedness, loss of savings, damage to their credit history, and repossession of goods and assets.

Fundamental and emerging topics under CEMC are explored in-depth through AFI’s Consumer Empowerment and Market Conduct Working Group (CEMCWG).

According to the Global Findex 2021, 23 percent of unbanked adults globally do not trust the financial system. Of all the unbanked adults, 54 percent are women. Apart from lack of trust in the financial system, women face other challenges that hamper their access to financial services. These include information asymmetry and social norms which pose unique consumer protection issues. It is therefore essential that regulators and policy makers begin to explore gender specific consumer protection practices. These include having laws, regulations, business practices, and information that enable women to use financial services safely and responsibly.

Consumer protection and empowerment are key to financial inclusion efforts and its aim of ensuring that everyone is included in their country’s financial sector. This is clearly demonstrated in the number of Maya Declaration targets that are categorized under CEMC – including targets on consumer protection, financial literacy and financial education.

PRIMARY THEMATIC AREA		2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023
Consumer Empowerment and Market Conduct Consumer Protection Financial Literacy and Financial Education	Maya Declaration Targets	49	72	99	102	122	134	142	192	192	199	233	282
	Completed	31	37	50	51	55	58	58	70	84	90	105	131
	In Progress	20	17	14	12	16	9	84	122	106	109	128	151
	Completion Rate	63%	51%	51%	50%	45%	43%	40.8%	36%	44%	45%	45%	46.45%

• Develop a shared understanding of good practices and cost-effective policy tools
• Promote policy adoption at national and international levels

   

  The CEMC Working Group achieves these objectives by:

• Promoting transparency and disclosure
• Encouraging effective sales and marketing practices
• Promoting the harmonization of international initiatives
• Creating avenues for help and redress
• Championing the benefits.

Financial Education Subgroup

Increased access and usage of financial services and products is a catalyst for economic empowerment and development for marginalized and vulnerable target groups such as women, the youth and forcibly displaced persons. Financial education means a process of providing people with knowledge, understanding, skills and confidence to make financial decisions and take actions which are appropriate to their circumstances and needs. On the other hand, financial literacy is the outcome of financial education programs which means the knowledge, understanding, skills and confidence that people have to assist them in making sound financial decisions and actions. Financial literacy programs can help to promote financial education programs that are scalable and sustainable and can also help to pave the way for their financial inclusion in the medium to long term.

Planned deliverable: 1) Repository of online financial literacy tools, 2) Update of two knowledge products: Financial Capability Barometer and Financial Education LAC Case Study.

Market Conduct Supervision Subgroup

Until recently, the main objective of a Risk-Based Supervision (RBS) approach was ensuring the safety and soundness of the financial system. Originally used for prudential supervision of banks and insurance companies, RBS has been modified for use in pensions and is now being considered for market conduct supervision. The challenges of supervising consumer protection are the same: deploying sufficient resources, focusing on both present and future risks, preventing risks from escalating and taking early corrective actions. There is still a need to assess the effectiveness of CEMC supervision by regulators especially as it relates to planning and implementation of onsite examinations. To address main challenges related to complaint handling in Central Banks, including (but not limited to) human resource management, feedback mechanism, enabling regulations required for effective complaint handling and effective enforcement mechanisms.

Planned deliverable: 1) Guideline Note on Impact Assessment of Financial Service Providers, 2) Market Conduct Supervision Manual.

Consumer Protection for Innovation Subgroup

This new subgroup was formed with the objective to tackle issues around consumer protection and innovations. As technology advances, so do the risks associated with data breaches and unauthorized access. Robust data protection laws and practices are essential to safeguard consumer information. Encryption, access controls, and transparent data handling are critical components. With the rise of digital transactions, consumers need assurance that their financial assets are secure (e.g. with multi-factor authentication, real-time fraud detection, and secure payment gateways). Innovations often introduce new products and services and ensuring their safety and reliability is paramount. Regulatory oversight, product testing, and clear liability frameworks protect consumers. Financial literacy programs, awareness campaigns, and accessible information empower consumers about their rights, risks, and choices. In an era of complex contracts and terms, consumers must understand what they’re agreeing to. Plain language contracts, disclosure requirements, and transparent pricing foster trust. As AI, Internet of Things (IoT), and blockchain gain prominence, consumer protection must adapt. Ethical AI, data ownership, and smart contract security are pivotal.

Planned deliverable: 1) Webinar series, 2) Focus group on Bank Supervision Assessment (BSA) tool.

2024

• Impact Assessment of Financial Service Providers: Market Conduct Risk-Based Supervision Guideline Note

2023

• Market Conduct Supervision – A Toolkit

2022

• Complaint Handling in Central Bank Toolkit
• Policy Recommendations on the Effective Redress Mechanisms in AFI Member Countries

2021

• Consumer Protection for Digital Financial Services: A Survey of the Policy Landscape
• Risk Sharing Facilities: Mobilizing Finance for Women-led MSMEs
• Digital Financial Literacy Guideline Note
• Guideline Note on Data Privacy for Digital Financial Services
• National Financial Education Strategies Toolkit
• Digital Financial Literacy Toolkit
• Financial Competency Matrix for Children and Youth
• Integrating Vulnerable Groups in National Financial Education Programs and Strategies
• Financial Education Programs Monitoring & Evaluation Toolkit
• Financial Consumer Protection During a Crisis

2020

• Framework: Complaint Handling in Central Bank
• Experiences in the Implementation of the Principle of Disclosure and Transparency in AFI Member Countries
• Policy Framework: The Financial Competency Matrix for Adults
• Policy Model on Consumer Protection for Digital Financial Services
• Financial Education in Latin America & The Caribbean

2018

• Case Study: The effectiveness of short-term financial education workshop in rural areas: the case of Armenia

2017

• Survey Report: Digitally Delivered Credit: Consumer Protection Issues and Policy Responses to New Models of Digital Lending
• Survey Report: Alternative Dispute Resolution
• Special Report: Financial Capability Barometer – A new methodology for measuring the financial capability of a country’s population

2016

• Guideline Note 21 – Market Conduct Supervision on Financial Service Provides: A Risk-based Supervision Framework

2015

• Guideline Note 17 – Policy Guidance Note and Results from Regulatory Survey

2013

• Guideline Note 09 – Help and Redress for Financial Consumers
• Guideline Note 08 – National Financial Education Strategies
• Guideline Note 07 – Sales and Marketing Practices
• Guideline Note 06 – Transparency and Disclosure

2010

• Policy Note – Formalizing microsaving: A tiered approach to regulating intermediation
• Policy Note – Consumer protection: Leveling the playing field in financial inclusion