We need to rethink financial consumer protection in order to make inclusive finance efforts more effective.

1. RETHINKING FINANCIAL CONSUMER
PROTECTION IN UGANDA
KELVIN KIZITO KIYINGI
DEPUTY DIRECTOR – COMMUNICATIONS DEPARTMENT
JANUARY 2017
Microfinance CEO Working Group
in cooperation with

2. We need to rethink financial
consumer protection in order to make
inclusive finance efforts more
effective.

3. Key Elements
Policy & Regulation
Financial Institutions & Self-
regulation
Communications & Consumer
Empowerment
M&E and Behavioral Research

4. Policy & Regulation
 Currently, there is neither a legal framework (no law) that covers
financial consumer protection issues nor a consumer protection
body/authority and this makes it difficult to address such related
issues. Financial consumer protection should be implemented in a
unified/holistic manner.
 I recommend establishing an integrated supervisory body for
Uganda’s financial sector – supervising securities trading and
several financial institutions – with the objective of ensuring the
proper functioning , stability and integrity of Uganda’s financial
system.
 Example : The Federal Financial Supervisory Authority of Germany (BaFin)
 Other examples: Financial Consumer Protection in Bulgaria Banking Sector;
Insurance, Social Insurance and Investment Sector. Financial Consumer
Protection Bureau in the U.K.
 German Government’s Coalition Agreement (17/12/2013) - BaFin
has always pursued Consumer Protection, but without explicit CP
mandate until 2015.
 “National financial market supervision in its structure to date, comprising
the BaFin and the Deutsche Bundesbank, has prove effective and is an
essential part of the concept for the new European supervisory structure.
The BaFin will be given the opportunity to restrict or prohibit the sale of
complex and non-transparent financial products in accordance with
European regulations in cases where such products threaten the stability
of financial markets or entail disproportionate risks for investors. It will
be assigned collective protection for consumers as an important objective
in its supervisory activity.”
Key Action Points: How do we
ensure that a legal framework
that protects consumers of
financial products and services is
put in place? How do we put in
place a supervisory body that
protects consumers in the entire
financial sector?

5. Financial Institutions & Self-regulation
 Financial institutions need to seek out relationships with their clients.
They need to be more transparent in their dealings and must comply
with the consumer protection legal framework. Trust and responsibility
have to be emphasized.
 I recommend a three-pronged approach to financial consumer
protection in Uganda, as is already being done by the Bank of
Uganda , Supervised Financial Institutions and the Consumers.
 Example: Key facts documents; under the Financial Consumer Protection Guidelines.
Where a financial services provider (bank) gives advice to a
consumer, the financial services provider (bank) shall ensure that:
(i) the advice is suitable, taking into account the circumstances and
needs of the consumer; (ii) any product or service which the
provider recommends a consumer to buy is suitable for the
consumer; (iii) there is no other product or service available to the
financial services provider that would be more suitable for the
consumer; (iv) the provider keeps sufficient records of each piece
of advice it has given to a consumer to enable it to demonstrate
that it clearly informs the consumer of any actual or potential
conflict of interest.
Key Action Points: What measures must be put in place to foster good relations between financial
institutions and their clients? What can be done to boost compliance and self-regulation among
financial institutions? How can we ensure that financial institutions are an integral part of consumer
protection efforts?
Suitability of advice

6. Communication & Consumer
Empowerment
 Empowered consumers are easy to protect; are less
susceptible to exploitation.
 I recommend the adoption of the financial citizenship
concept. This is a concept related to the full exercise
of the citizens’ rights and duties with respect to their
financial life.
 Example 1: Central Bank of Brazil
 2012 – Area of Institutional Relations and Citizenship
 Integrated approach – 3 Departments: Financial Education, Communication and
Client Relationship (complaints)
 Example 2: Bank of Uganda FCP Communications Strategy
 Rolling out the Financial Consumer Protection Guidelines
 Guarantor, Cooling-off period, Key Facts Document
 Integrated approach – 3 Players: BoU, SFIs and Consumers
Financial
Inclusion
Consumer
Protection
Financial
Education
Key Action Points: How do we empower consumers? How do we
ensure that consumers are aware of their rights and
responsibilities? How do we make sure that consumers are part of
the financial products and services chain of production?

7. M&E and Behavioral Research
 Current challenges in the financial sector are due to , in large
measure, the behavioral of consumers and lack of
measurement of inclusive finance efforts.
 Therefore, I recommend integrating behavioral research in
all inclusive finance efforts in tandem with putting in place
measures to monitor and assess the impact of such efforts.
Main areas of focus: disclosure and transparency;
complaints handling and recourse; debt stress (loan
management); and fair treatment.
 Example: AMFIU Complaints Handling System.
 Complaints are received at AMFIU’s office in Kampala.
 AMFIU office captures the information related to the case
 The process hinges on establishing whether clarification or real
disagreement
 In case of conflict, AMFIU documents the case and hears both sides.
 The Committee on Complaints Handling at AMFIU discusses unresolved
issues
Key Action Points: How can we ensure that behavioral research efforts are integral
to inclusive finance initiatives? What is the best way of measuring and assessing the
impact of inclusive finance efforts? How can we use/know the form of complaints
handling preferred by the clients?
Complaints Handling

8. Recap
 We need to rethink financial consumer protection in order
to make inclusive finance efforts more effective.
 Currently, there is neither a legal framework (no law) that covers financial consumer protection
issues nor a consumer protection body/authority and this makes it difficult to address such related
issues. Financial consumer protection should be implemented in a unified/holistic manner.
 I recommend establishing an integrated supervisory body for Uganda’s financial sector –
supervising securities trading and several financial institutions – with the objective of ensuring
the proper functioning , stability and integrity of Uganda’s financial system.
 Financial institutions need to seek out relationships with their clients. They need to be more
transparent in their dealings and must comply with the consumer protection legal framework.
 I recommend a three-pronged approach to financial consumer protection in Uganda, as is
already being done by the Bank of Uganda , Supervised Financial Institutions and the
Consumers.
 Empowered consumers are easy to protect; are less susceptible to exploitation. Making consumers
aware of their rights and responsibilities make inclusive finance efforts more successful.
 I recommend the adoption of the financial citizenship concept. This is a concept related to the
full exercise of the citizens’ rights and duties with respect to their financial life.
 Current challenges in the financial sector are due to , in large measure, the behavioral of consumers
and lack of measurement of inclusive finance efforts.
 Therefore, I recommend integrating behavioral research in all inclusive finance efforts in
tandem with putting in place measures to monitor and assess the impact of such efforts. Main
areas of focus: disclosure and transparency; complaints handling and recourse; debt stress; and
fair treatment.

9. Thank you, open for
Q&A