Are Consumer Protection Initiatives Meeting Expectations

This paper gives an interesting explanation of the approach adopted in Canada, UK and Australia:

http://www.isis.org.my/files/pubs/papers/AreConsumerProtection.pdf

It explains the approach taken in Singapore as follows:

In the case of Singapore, financial services (excluding money lending and pawn broking) have now been brought within the ambit of the Consumer Protection (Fair Trade) Act of 2004. Consumers now have the option to pursue remedies under the Act for unfair practices and unconscionable conduct (such as high-pressure selling) by financial institutions. Dispute resolution is delegated to the Financial Industries Disputes Resolution Centre Ltd although only cases of up to S$50,000 will be heard. Interestingly, in 2004 the President of the Consumer Association of Singapore, who is also a Member of Parliament, raised the issues of high pressure sales tactics, the high rates of interest charged on credit card balances and the ‘cartel-like manner’ in which banks maintained interest rates of 24 per cent when other financial borrowings incurred interest of less than 5 per cent.

The Second Minister of Finance responded by saying that the Monetary Authority of Singapore does not consider its role to include directly settling commercial disputes between financial institutions and their customers. The Authority also does not interfere in the setting of interest rates and prices or what terms and conditions should govern commercial transactions. Rather, he Authority provides the regulatory framework for the necessary disclosure and the proper business conduct standards to be undertaken so as to ensure that the consumer is fairly treated.

In the light of the above, how might one evaluate Bill Knight’s conclusion that “the importance of
the consumer to a vibrant and healthy economy has moved non-prudential/market conduct regulation to a place at the table beside prudential regulators in the financial services regulatory structures around the world”? This might be true of OECD countries generally but significant developments in other parts of the world seem less apparent. Could one possibly envisage conditions where governments “move forward to adjust regulatory structures (and) pay close attention to the consumer and their needs”? Consumers are unable to generate any degree of countervailing weight while governments still seem be too protective of, and too hesitant to ‘fetter’ their financial institutions, to do anything dramatic in this direction. One may not be far wrong to say that most countries are, to some degree or other, behind the best-practice curve and perhaps Asian countries are further behind than where they ought to be.

The key message from this paper is quoted in the last line, "most countries are, to some degree or other, behind the best-practice curve and perhaps Asian countries are further behind than where they ought to be."