Page 13 - FIGI Digital Financial Services Consumer Competency Framework

males who have a high incidence of default (i.e. 31% privacy clause whatsoever and another half did not
in Tanzania) and late payment rates of up to 40%. inform the user what data was being collected.
11
CGAP’s study also highlighted that the ease of DFS Thus, DFS consumers, even if highly financial-
loans may encourage gamification of debt (borrow- ly literate which is unlikely to be the case do still
12
ing and rapidly repaying solely to increase one’s require a market conduct regulator to review DFS
credit availability), as well as outright gambling in a agreements to ensure fairness and legality of same.
significant percentage of the borrowers surveyed. Furthermore, because DFS agreements are consid-
7
This has led to increase in small loan default, and ered contracts of adhesion, and therefore consum-
potential financial exclusion, due to having a nega- ers, even if they disagree with the terms have no real
tive listing by credit bureaus. power to negotiate a new agreement with DFS pro-
8
Of even greater concern is that, for the bulk of viders. Their only alternative is to not use the service;
consumers, even when they do possess basic finan- period. This may not be possible in an era where
cial literacy, they probably are not reading the terms cashless transactions are becoming the norm, or
and conditions of financial services. In 2016, the when salaries or government benefits are received
9
ITU conducted a review of 18 different DFS terms via digital payments for example.
and conditions and enumerated various consumer In short, a high quality, engaging financial litera-
protection and competition law concerns regarding cy program should be integrated into the national
the majority of the agreements reviewed, including education system, in an ideal world. It should also
illegal limitations on consumers’ right to redress . In be included in any national financial inclusion strat-
10
the research of Professor Kevin Butler, University of egies. Given that this may take time, the role of the
Florida, conducted by reviewing 54 DFS agreements regulator in defining the core consumer competenc-
noted that half of these agreements lacked a data es for digital financial services becomes all the more
critical .
13

3 DFS CONSUMER COMPETENCY FRAMEWORK

The Framework covers core consumer protection b) Make informed choices and clearly understand
issues in digital financial services, such as fair and pricing and relevant terms and conditions;
transparent information about the service; infor- c) Use safely and avoid falling victim to fraudulent or
mation about the costs for service; dispute resolu- deceptive marketing practices;
tion and redress mechanisms, data protection, and d) Understand the risks of failure to protect data pri-
payment credentials protection among others. vacy in digital financial services;
DFS consumer competences as described in this e) Engage with grievance redress and recourse
report combine knowledge, skills, and proactive atti- mechanisms if things go wrong;
tudes. Competences are aligned with the European f) Identify skills that more vulnerable populations
Commission Recommendation of key competences (e.g women, youth, the elderly and disabled) may
for lifelong learning, which defines competence as need to make informed, safe, confident use of
the sum of knowledge, skills, and attitudes. DFS;
The objectives of the DFS Consumer Competen- g) Identify skills for people with disabilities to make
cy Framework are to identify the basic competences best use of DFS.
and skills that will enable consumers to:

a) Engage in financial transactions using digital
channels;

Digital Financial Services Consumer Competency Framework 11