THE Reserve Bank of Zimbabwe (RBZ) has introduced Consumer Protection Prudential Standards to provide minimum guidelines for consumer protection.
BY BUSINESS REPORTER
The standards released last week, are meant to enhance the protection of consumers in the face of increased complexity and diversity of products.
“The ever-increasing complexity and diversity of the range of products and services offered by financial institutions and the increasing transfer of opportunities and risks to consumers call for enhanced protection of consumers of financial services. Financial market development, innovation and misaligned incentives for financial services providers increase the risk that consumers may face fraud, abuse and misconduct,” the RBZ said.
“In particular, low-income and less experienced consumers often face particular challenges in the market place. The existence of a sound financial consumer protection framework is fundamental to increasing access to and usage and quality of financial services, along with supporting further banking sector deepening.”
Part of the objectives of the new guidelines will be to increase public awareness of financial services and products, promote greater transparency and minimise information asymmetry between consumers and regulated entities.
Guidelines in the Consumer Protection Prudential Standards are expected to provide knowledge to consumers on how they can better protect themselves in the banking sector. The objectives of these standards include ensuring the availability of consumer redress and development of formal or informal robust grievance redress mechanisms for handling customer grievances that are fair.
Another key objective, apart from ensuring that interests of both consumers and regulated entities are protected, is to foster customer confidence and trust in the banking sector that has recently been waning.
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“Consumer protection empowers consumers with information and basic rights, provides an important source of market discipline to the financial services sector, and fosters competition by encouraging regulated entities to offer better products and services rather than taking advantage of poorly informed consumers,” RBZ said.
“Adopting good practices on consumer protection will positively influence the financial services sector as this is consistent with the Reserve Bank’s overall objective of promoting and maintaining efficient financial markets and financial stability.”
The RBZ said a sound financial consumer protection regime needs to be complemented with prudential regulation and supervision and a stable macroeconomic environment. Prudential requirements are intended to ensure that the financial system remains sound and stable, while the financial promises made by financial institutions are met.
“Going forward, the Consumer Protection Prudential Standards are expected to provide proper supervisory oversight and adequate resources are therefore essential to ensure adherence to these standards,” RBZ said.
