Page 61 - ITU-T Focus Group Digital Financial Services – Recommendations

ITU-T Focus Group Digital Financial Services
Recommendations

Title of recommendation Regulatory harmonization for all financial products
Working Group Consumer Experience and Protection

Theme General framework
Audience for recommendation Regulators

Regulators should work individually and in collaboration with one another to harmonize coverage of different
DFS provider types, and ensure consumer protection provisions apply to all financial products provided digitally.
Regulations should require that consumer protection for DFS consumers is not inferior to that of consumers in
the traditional banking sector.

Regulators should consider the unique characteristics of DFS – such as the use of agents, reliance on a technology
interface, and longer and more complex value chains – in their approach to consumer protection. According
to Consultative Group to Assist the Poor (CGAP) , key DFS consumer risks include: Trouble completing a
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transaction due to network/service downtime; insufficient agent liquidity or float, which also affects ability
to transact; complex or confusing user interfaces; digital recourse issues; lack of transparent fees and other
terms; fraud; and data privacy and protection concerns.
The increased number of entities involved in delivering DFS may elevate these risks and create gaps in oversight
and accountability. For example, liability for the loss of customer funds due to fraud or mishandling may be
unclear due to the involvement of several parties (including agents) delivering the service. New players and
partnerships that deliver DFS may be subject to diverse forms of regulation and supervision, such as those
governing banking, payments, telecommunications, and insurance.
Consumer protection rules need to specifically address DFS risks and be harmonized across different DFS
provider types to avoid gaps and inferior treatment for digital versus non-DFS. Guidelines for E-Money Issuers
in Ghana obligate e-money issuers to fully adhere to any rules issued by the Bank of Ghana pertaining
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to consumer protection as well as such basic principles of consumer protection as: Equitable, honest, and
fair treatment of all customers; transparency and disclosure of clear, sufficient, and timely information on
the fundamental benefits, risks, and terms of any product or service offered in an objective and accessible
form; sufficient and accessible information to customers on their rights and responsibilities; protection of
customers’ privacy; responsible business conduct of all staff and agents; and adequate systems and processes
for complaints handling and redress.

Regulators’ licensing procedures should ensure that DFS providers are subject to clear and enforceable rules
that protect customer funds from loss due to a provider’s insolvency, fraud, or other operational risks. One
option is to require DFS providers to operate under the license of one regulator even if some services fall under
the purview of more than one authority, an approach recommended by the Alliance for Financial Inclusion
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(AFI). Regardless of how regulation and oversight are allocated, the roles, responsibilities, and information
sharing rights and obligations of all participants should be clearly defined in regulations and interagency
memorandums of understanding. This is in line with the G20 High-Level Principles on Financial Consumer
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10 McKee, K., Kaffenberger, M., and Zimmerman, J.M. (2015), Doing Digital Finance Right: The Case for Stronger Mitigation of Cus-
tomer Risks. http:// www. cgap. org/ sites/ default/ files/ Focus- Note- Doing- Digital- Finance- Right- Jun- 2015. pdf
11 Guidelines for E-Money Issuers in Ghana (2015) https:// www. bog. gov. gh/ privatecontent/ Banking/ E- MONEY%20 GUIDELINES- 29-
06- 2015- UPDATED5. pdf
12 Mobile Financial Services Consumer Protection in Mobile Financial Services (2014), http:// www. afi- global. org/ sites/ default/ files/
publications/ mfswg_ guideline_ note_ 7_ consumer_ protection_ in_ mfs. pdf
13 G20 High-Level Principles on Financial Consumer Protection (2011) https:// www. oecd. org/ g20/ topics/ financial- sector- reform/
48892010. pdf

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