Consumer organisations demand improvements to consumer protection in financial markets
Yesterday the international consumer movement celebrated World Consumers Right Day. The Federation of German Consumer Organisations, vzbv, demanded to institutionalize consumer protection in financial oversight institutions. vzbv-Director, Gerd Billen, criticized: “Today German financial regulators are not tasked with protecting consumers from deceptive and abusive financial practices. Hence financial service junk gets into the hands of consumers.”
On the other side of the Atlantic financial reforms are moving forward. Senate Banking Committee Chairman, Chris Dodd, unveiled a financial reform package. While it does not include a separate and independent Consumer Financial Protection Agency (CFPA), it sets out to establish a watchdog housed in the Federal Reserve with independent funding and a director appointed by the President. The new watchdog will have rulemaking authority for banks and non-banks that engage in lending and other financial services, such as payday lenders, and rent-to-own stores.
While US consumer organizations applaud this compromise as a step into the right direction given the pressure from large banks, they criticize that the bill gives veto power over new consumer protections to another group of banking regulators and relies too heavily on these same regulators to enforce new safeguards.
For further information, see: http://www.vzbv.de/go/presse/1280/index.html, http://www.consumersunion.org/pub/core_financial_services/016043.html and http://www.consumerfed.org/elements/www.consumerfed.org/File/Financial_Services_Regulation_Dodd_substitute_statement03-10FINAL.pdf
Source: vzbv, Consumers Union und Consumer Federation of America