The advent of financial technology has led to rapid innovation in the financial services industry. This innovation has the potential to improve the rate of financial and economic inclusion by broadening financial access and improving the affordability as well as the quality of financial products and services. Fintech has proven to be the solution for most of the barriers to financial inclusion by delivering high-quality financial services to the last mile via technology. While FinTech and other financial service providers continue to drive financial inclusion in Nigeria, concerns around consumer protection need to be intensively addressed to avoid losing the benefits of financial access and to prevent driving people (especially the low-income earners) back to poverty and undue hardship.
In 2012, the SMART campaign developed the Guidance on the Client Protection Principles and Standards of Protection for Digital Credit to provide an objective seal of confidence that financial service providers (FSPs) are adequately implementing client protection principles and taking the right measures to treat clients fairly, especially when offering credit.
The standards are underpinned by the following 7 client protection principles, providing a global standard of what should be expected from financial service providers in terms of good practices that protect their clients:
- Appropriate Product Design and Delivery
- Protection of Over-Indebtedness
- Responsible Pricing
- Fair and Respectful Treatment of Clients
- Privacy of Client Data
- Mechanisms for Complaint Resolution
The innovative aspect of these standards is the shift in emphasis when implementing consumer protection from staff and operations to product design and delivery. When services are delivered primarily through front line staff or loan officers, clients are protected by ensuring that staff are well-trained and properly incentivized. With digital services, the consumer experience is embedded in the design of the product and user interfaces. Digital financial service providers will need to institute practices in the design process to confirm that consumer risks are mitigated.
These standards represent a big step forward for protecting consumers who are accessing financial services digitally for the first time. However, due to factors such as lack of clear understanding of consumer protection regulations, a highly competitive environment, and a largely financially illiterate populace, standards like these are not effectively implemented in Nigeria, leading to financial service customers being exploited without any redress mechanism.
The EFInA Fintech workshop presents an opportunity to share key insights on consumer protection best practices applicable to the financial sector and effective approaches for implementing these consumer protection standards by FinTechs (and other financial service providers). The workshop theme is “Financial Technology & Consumer Protection”, and in this workshop, we aim to:
- Enumerate the risks consumers face in the Fintech space and analyze typical consumer protection concerns
- Outline the consumer protection challenges present in the Nigerian markets
- Share best practice consumer protection standards to guide financial service providers
- Discuss the importance of instituting consumer protection standards in the product design process
- Provide a practical approach to implementing the financial consumer protection standards
Workshop Target Audience
This Fintech Workshop is targeted at key stakeholders in the Nigerian financial ecosystem, including Fintechs, Other financial service providers (MMOs, Commercial Banks, Microfinance Banks, etc), and Regulators.
The expected outcome of the workshop is to have financial service stakeholders that have been educated on the various ways that consumer protection can be implemented effectively to promote growth, enhance financial stability and increase consumer welfare especially for the un(der)banked population.
At the end of the workshop, we hope our stakeholders would:
• Have a better understanding of best practice consumer protection standards.
• Be educated on how these principles should be applied in their product development and overall business strategy.
• Be committed to upholding consumer protection standards as they drive uptake of innovative financial products.
We look forward to hosting you.
You can also access our Fintech Landscape and Impact Assessment Report here, for insights on the potential Fintech has in Nigeria and what steps can be taken to drive an enabling environment for Fintech in Nigeria.