Financial Consumer Protection Principles

  • The G20/OECD presented a draught of their 2011 High-level Principles on Financial Consumer Protection earlier this year. India must set an example for others and adopt the updated principles as it assumes the G20 chair in December, especially given that the future of the world’s financial markets is bleak.
  • The laws, rules, and institutional frameworks that protect consumers in the financial industry are together referred to as financial consumer protection. Tools for policymakers, regulators, development partners, and other specialists are included, as well as technical advice and country reports.


  • 10 subject areas the 2011 principles comprised ten themes that reflected market and consumer challenges, such as disclosures and transparency, equitable and fair consumer treatment, and financial literacy.
  • Included were the following two principles: These guidelines were approved at the fourth meeting of central bank governors and finance ministers in October. Two further guiding principles—access and inclusion and high-quality financial products—were added in 2022.
  • The new principles also advocate regulator engagement in some high-risk products, the development of appropriate corporate cultures, and the application of behavioural insights to improve customer outcomes.

These principles deal with three cross-cutting themes

  • Financial well-being,
  • Digitalization and
  • Sustainable finance.

Financial well-being

  • Individual financial well-being is defined by the OECD as having control, feeling secure, and having flexibility over one’s own present and future financial situation.
  • Consumer-friendly disclosure: Consumers must get adequate and simple-to-understand disclosures under a successful FCP framework. An information dump, especially in India where financial literacy is not widely practiced, defeats this goal.
  • Risk profiling by service provider: Before offering their services, certain financial service providers are required by regulators like SEBI to determine the eligibility of their clients and carry out risk profiling.
  • India does not currently recognise this theme. India does not currently recognise this notion. In the future, when faced with issues like economic hardship and financial illiteracy, it might be something to think about.


  • The number of digital channels used by customers to connect with financial products and services is growing, and FCP must take this into account as well as the effects of increased usage of artificial intelligence and other developing technologies.
  • RBI’s guidelines for online lending: The RBI issued guidelines on digital lending in September, requiring businesses offering these services to establish a grievance officer, determine a borrower’s creditworthiness before giving credit, and permit borrowers to withdraw without incurring fees.
  • Poor complaint resolution: In the UPI ecosystem, complaints against payment service providers are also a source of worry. FCP will remain important due to the increase of UPI transactions and the fact that cryptocurrencies are still largely unregulated.

Sustainable financing

  • A multi-dimensional strategy Consumer desire for sustainable financial investments is rising. Environmental, social, and governance aspects are now being included into the operations, goods, and services of financial services firms.
  • Transparency is essential, and FCP suggests enhancing it to aid consumers in making knowledgeable decisions.
  • To encourage responsible corporate governance with regard to climate change, SEBI has changed “business responsibility reporting” to “business responsibility and sustainability reporting” (BRSR).
  • A sustainability performance report is one of the disclosures that BRSR-eligible companies are required to publish. Investors can then decide with knowledge. It is necessary to implement comparable disclosures in other market segments.


According to the RBI’s financial inclusion index, more people are participating in the financial system. FCP is essential to guaranteeing their persistence. Because of the sectoral and fragmented nature of the existing regulatory environment, regulatory arbitrage occurs, as was seen in the case of digital gold. To safeguard consumers, regulators must act in concert.

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