Dear Mr. President,
Ladies and Gentlemen, Let me echo the President’s welcome remarks and also extend a warm welcome to this Conference. Today the World Bank is releasing its draft Diagnostic Review on Consumer Protection in Financial Services in Romania. The report was prepared at the request of the Romanian authorities. We are very pleased to hear that all the institutions of the professional associations from the financial sector which were consulted during the review are present here to discuss the findings of the report. We hope that these discussions will constitute the basis for planning forward to define the different options for the implementation of the recommendations made by the authors of the review. Romania is one of nine countries that are part of the World Bank program to review consumer protection and financial literacy in Europe and Central Asia. The other countries range from Latvia, to Slovakia to Russia. The objectives of the diagnostic developed by the World Bank are three-fold, to: (a) refine a set of good practices for assessing consumer protection and financial literacy; (b) conduct a review of the existing rules and practices in Romania compared to good practices; and (c) provide recommendations on ways to improve consumer protection and financial literacy in Romania.
The Review was conducted using a set of draft international Good Practices as a reference point. Working with international regulators, the World Bank has drafted a set of international Good Practices on Consumer Protection and Financial Literacy. The Good Practices have been released as a Consultative Draft for international review and comment—and are expected to evolve following discussions among stakeholders. The Good Practices incorporate provisions of the EU Directives related to consumer protection and reports of European financial regulatory and supervisory agencies, as well as laws, regulations and business practice codes in the United States of America (US), Australia, Canada and other countries worldwide. The OECD has also released sets of good practices for financial education and awareness on pensions and insurance, and credit products, supplementing the recommendations presented in its 2005 global review of financial education programs. As part of the process of further refining and developing the Good Practices, the Diagnostic Review for Romania was prepared using the Good Practices as a reference point. The Diagnostic Review for Romania aims to stimulate the dialogue of financial consumer protection and financial literacy both in Romania and worldwide. In particular, it is anticipated that application of the good practices in middle-income countries, such as Romania, will contribute to international policy dialogue on the key components of financial consumer protection and assist in the development of benchmarks that are widely accepted as generally applicable to consumer protection in financial services in any jurisdiction. For the Romania Review, five segments of the financial sector were assessed—banking, securities, insurance, private pensions and non-bank credit institutions. Eight issues were considered: (1) consumer protection laws and institutions; (2) disclosure and sales practices; (3) customer account handling and maintenance; (4) privacy and data protection; (5) guarantees and compensation schemes; (6) mechanisms for recourse in case of disputes; (7) consumer empowerment (including programs for consumer education and financial literacy); and (8) competition issues in financial services. The assessment is not exhaustive and has not captured all prevailing services, products and practices of the financial sector but has focused on the key areas related to consumer protection and financial literacy. The Review was conducted in March 2008 although some data has since been updated. The presentation of the findings of the report today and the discussions that we hope will trigger are very timely. The financial crisis has shown the vulnerabilities of the financial sector and the severe impact on both lenders and consumers. As a result, the financial sector framework is under debates at all levels. The new framework calls for a new regulatory agenda that reduces the risks and improves the risk management, for a stronger coordinated supervision and for effective crisis management procedures. At the same time there is an increased recognition of the need for a more responsible lending and borrowing: responsible lending, where the financial products sold are appropriate for consumers’ needs and are tailored to their ability to repay, and responsible borrowing, where consumers provide relevant, complete and accurate information on their financial conditions that are vital components in ensuring a stable and effective financial market. We do hope that the presentation of this Diagnostic Review for Romania will contribute to the national policy dialogue on these two facets of responsible financial services. We also anticipate that the application of good practices in middle-income countries such as Romania, will contribute to international policy dialogue on the key components of financial consumer protection and assist in the development of benchmarks that are widely accepted as generally applicable to consumer protection and financial literacy in any jurisdiction. Let me conclude by wishing you an intensive and fruitful conference. Thank you
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