New Delhi, October 13, 2011
Pradeep S. Mehta, Secretary General, CUTS International and Shirish Deshpande, Chairman, Mumbai Grahak Panchayat are signatories to this letter from India, along with James A Guest, President, Consumers International, and leaders of other consumer organisations across the world.
In September 2010, CI working with consumer organisations in all G20 countries launched the ‘Consumers for Fair Financial Services’ campaign calling for the G20 to take urgent action to support financial consumer protection. Following the launch of the campaign, the G20 leaders meeting in Seoul in November 2010 requested the Financial Stability Board (FSB) to report on options to enhance protection in consumer finance (credit), and the G20 finance ministers requested the ‘Organization for Economic Cooperation and Development’ (OECD) to develop a set of ‘high level principles on financial consumer protection’. Both proposals will now be presented to G20 finance ministers in Paris, 14-15 October and the G20 leaders in November.
While CI and its members contributed formally to the process, there is disappointment that key demands were not included in the final submission.
The global consumer rights movement believes crucial omissions in new G20 proposals on financial services, to be considered by the meeting, will mean they do little to improve protection for consumers from bank failures and will fail to remove risky mortgages and poor credit services from the market.
The letter urges the G20 to “remember that weak consumer protection in the form of irresponsible mortgage lending was both a catalyst for the financial crisis, and is a long-standing concern of ‘ordinary people’ who use financial services every day.”
As outlined in the open letter, the proposals “do not include any explicit reference to deposit guarantees in the event of bank failures, nor do [they] support the adoption of minimum standards for financial products.” CI believes these are crucial steps for avoiding any future financial crises.
CI also calls for G20 leaders to support the establishment of a new international organisation to champion financial consumer protection in banking and the provision of credit. CI has proposed that the organisation is based on an existing network of national financial consumer protection agencies and has an independent consumer panel to monitor, challenge and advice.
President of Consumers International, Jim Guest, will be addressing finance ministers and central bank executives on Friday, October 14, ahead of the G20 meeting, raising concerns of CI and its member organisations.