WOCCU Supporters: Extending the Cycle of SelfHelp

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Protecting and Educating Consumers in the
Financial Sector
OECD Paris June 15, 2009
Brian Branch Executive Vice President Chief
Operating Officer World Council of Credit Unions
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Consumer Protection and Education (CPE)

• Safeguarding of Consumer Interests in Terms of
  Quality, Price and Safety
• or
• Providing Financial Services in Ways that Improve
  and do not Harm the Economic Well-being and
  Prosperity of the Consumer

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What Will Drive This?

• Public Pressure
• Public Policy
• Corporate Social Responsibility
• Institutional Mission
• Competitive Pressure

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Push or Pull?

• PUSH
• Public Pressure
• 2. Public Policy

• PULL
• Corporate Social Responsibility
• Institutional Mission
• 5. Competitive Pressure

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1. Public Pressure

• Growing Demand for more Responsible Financial
  Institution Corporate Behavior
• Global Trends in Transparency of Financial Sector
• Greater Immediate Information Access via Internet
  
• Reputational Risks

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2. Public Policy

• 1. Increased Legislation / Regulation for
  Transparency
• Mandatory Standardized Disclosure Reporting
  Requirements
• Client Confidentiality
• Data Protection
• Ombudsman
• Credit Bureau

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2. Public Policy (cont.)

• 5. Legislation / Regulation Limiting Application
  of Interest Rate and Fee Changes
• 6. Mechanisms for Redress
• 7. Interest Rate Caps

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3. Corporate Social Responsibility

• How will Corporate Social Responsibility Evolve
  in the Financial Services Sector Post 2008-2009?
• Previously, Focused on Climate Change and
  Greening, Financial Access/Inclusion and
  Financial Literacy
• Now, Discussions Emphasize Responsible Lending,
  Consumer Protection and Financial Literacy
• From Corporate Social Responsibility To Consumer
  Protection Education

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4. Institutional Mission

• Degree of Acceptance will Vary whether Financial
  Institution is Mission or Shareholder
  Value-Driven
• Credit Union Objectives of Financial Empowerment
• to advance financial and economic well-being of
  their members
• Micro Finance Institution Objectives of Financial
  Inclusion
• CPE driven by mission and business model
• contributes to stakeholder mission and value

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International Credit Union Consumer
Protection Principles

• Disclosure of Rates and Fees
• Periodic Statements
• Honest and Non-Deceptive Promotions
• Fair Credit Practices
• Dignified Collection Practices
• Members Consent to Share Information
• Dispute Resolution Services
• Provide Education about Thrift and Wise Use of
  Credit Provide Education about Thrift and Wise
  Use of Credit
• Fair and Forthright Conversions

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5. Competitive Pressures

• Is there a Competitive Advantage for Financial
  Institution in CPE?
• Minimizing Credit Risk
• Reputation for Business Conduct Becomes a
  Differentiating Brand Presence
• Builds Stronger Relationship with Clients /
  Members over Long Term

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How Deep Will This Go?

• Charitable Exercise / Add-on or Business
  Strategy / Market Opportunity?
• Giving Money Away and Volunteering in the
  Community (CRA)
• Or Way of Contributing to the Bottom Line

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Business Case for CPE

• Will Improved Practices, Industry Standards, Best
  Practices Become Established, Sustainable?
• Will Financial Institutions Establish Policy and
  Management Systems to Embed These into Their
  Operations and Report on Performance?
• Is There a Strategic Approach to Become a
  Business Opportunity?

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Push or Pull?

• PUSH
• Public Pressure
• 2. Public Policy

• PULL
• Corporate Social Responsibility
• Institutional Mission
• 5. Competitive Pressure

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Thank you
Brian Branch Chief Operating Officer Executive
Vice President World Council of Credit Unions