Academic journal article Contemporary Readings in Law and Social Justice

Legal Aspects and Developments for Financial Consumer Protection: Evidence from the Romanian Banking System

Academic journal article Contemporary Readings in Law and Social Justice

Legal Aspects and Developments for Financial Consumer Protection: Evidence from the Romanian Banking System

Article excerpt

1. Introduction

Strengthening financial consumer protection is an issue that gained importance alongside with consumer number increase and complexity of financial products and services.

Therefore, currently, strengthening financial consumer protection is on the agenda of several national and international bodies: the Group of Twenty (G20), the Financial Stability Board (FSB), the Organization for Economic Cooperation and Development (OECD), the World Bank etc. Consumer organizations also play an important role in promoting the rights of consumer of financial products and services.

However, financial consumer protection is weak both in countries with developed, well-established financial sector and countries with less mature and developed financial sector (Consumers International, 2011).

2. International Developments on Financial Consumer Protection

In 1985 the United Nations (UN) adopted the United Nations Guidelines for Consumer Protection (UNGCP), document that underlined the basic consumer rights and served as reference point in designing the legal framework for consumer protection across the world (UN, 2003).

Even if the existing Guidelines are still valid, in 2012, the UNCTAD triggered the revision process of the UN Guidelines for Consumer Protection. As indicated by the UNCTAD, financial services are among the new issues that the UNGCP revised document has to address (UNCTAD, 2012).

Protection of consumers and financial stability are major objectives of traditional regulatory and supervisory framework. However, the recent developments that affected market for financial services also require dedicated policy action for financial consumer protection (OECD, 2011).

In February 2011, the G20 Finance Ministers and Central Bank Governors called for the OECD, the FSB and other international organisations to develop principles on financial consumer protection. The result of this call was the documents titled "G 20 High-level Principles on Financial Consumer Protection" issued in October 2011 (OECD, 2011).

The FSB document "Consumer Finance Protection with particular focus on credit" (FSB, 2011) was another response to the international call for enhancing consumer financial protection. According to this report, consumer protection authorities, responsible lending practices and product intervention are among the FSB members' options for enhancing financial consumer protection (FSB, 2011).

At the European level, several European Union (EU) Directives on financial consumer protection were adopted. The directive on credit agreements for consumers has a particular importance (Directive 2008/48/EC). On 28 January 2014, the Council of the European Union adopted a directive on mortgage credits (Council of the European Union, 2014). The two directives aim to improve the protection of the European credit consumer.

Enhancing consumer protection across the UE is also achieved through the network of European Consumer Centres.

Consumers International is an international organization founded in 1960 that has over 240 member organisations in 120 countries. The mission of this organisation is to promote consumers rights internationally. In order to increase financial consumer protection, in October 2010, Consumers International launched the campaign "Consumers for Fair Financial Services." Among other key projects developed by Consumers International concerning financial services one can mention: financial education, mobile payments, global money transfer.

Financial education was another direction that received attention. The OECD International Network on Financial Education developed principles on national strategies for financial education. These principles were endorsed by the G20 Leaders (OECD/INFE, 2012).

3. The Legal Framework for Consumer Protection in Romania

In Romania, laws governing consumer protection have been adopted relatively late compared to the U. …

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