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Consumer Protection Developing Standards and Next
Steps Lillian C. Diaz Lead Consultant, Networ
k Strengthening Program
The SEEP Network
Tunis May 2008
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New World Bank Effort on Consumer Protection
In 2006, the World Bank started a pilot program
to conduct diagnostic reviews of consumer protect
ion including financial literacy. To date, re
views have been conducted in Slovakia, Czech
Republic, Romania, Croatia and Azerbaijan.
Based on these review, Good Practices were devel
oped.
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Five areas of Good Practice
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Legislative and Institutional Arrangements
In Slovakia there is a single body responsible
for consumer protection (Slovak Trade
Inspection). In Azerbaijan there are at least
three agencies responsible.
The law should provide for clear rules on
consumer protection in the area of microfinance
and there must be adequate institutional
arrangements for implementation and enforcement
of these rules. There should be a principles
-based Code of Conduct for Microfinance that is
devised in consultation with the industries
involved, and is monitored and enforced in the
last resort by a statutory agency.
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Customer Disclosure and Sales Practices
Customer disclosure and sales practices should be
included in the Microfinance Code of Conduct and
monitored by the supervisory authority.
Microfinance institutions serving in excess of 1
0,000 customers should be rated for their
credit-worthiness and claims paying by
internationally credible institutions.
The regulator or supervisor should publish annua
l public reports on the development, health,
strength and penetration of the microfinance
sector.
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Customer Account Handing and Maintenance
Customer account handling and maintenance
practices should be included in the Microfinance
Code of Conduct and monitored by the supervisory
authority
Examples from model code Full disclosure in plai
n language Effective or annual percentage rate T
wo way lines of communication Disclose all inform
ation to be shared with third parties and allow
customers to opt out
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Privacy and Data Protection
The law should require microfinance institutions
to ensure that they protect the confidentiality
and security of customers information, against
any anticipated threats or hazards to the
security or integrity of such information, and
against unauthorized access to, or use of,
customer information that could result in
substantial harm or inconvenience to any
customer.
In Azerbaijan, the Law on Banks (Art. 41)
specifies that bank secrecy applies to customer
and correspondent accounts and deposits,
information about existence of accounts, account
transactions and balances, however, this law does
not include many microfinance institutions which,
therefore, have no secrecy requirement.
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Dispute Resolution
A system should be in place that allows consumers
to seek third party recourse in the event they ca
nnot resolve an issue with the microfinance insti
tution, which could be an ombudsman or tribunal.

In Azerbaijan, as in many countries, customers
must use the court system to seek redress from a
financial institution - a cumbersome process.
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NEXT STEPS

• The Good Practices are still in draft form
• SEEP Consumer Protection Working Group vetting
  across all geographies
  
• Your comments will help improve the Good
  Practices
  
• Looking for additional countries to perform a
  consumer protection diagnostic - please let us
  know if you are interested!!
  

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Thank you for your attention!