Until recently the protection of consumer finance users in Thailand were rather limited. In the past, as the consumers and people in general are not that well-educated, the economy and financial system as well as financial services and products were not that developed, and the consumer awareness was not that significant, but as of now people are more aware of their rights. So coupling with the growing business in terms of credit card and consumer loans the government has stepped in and tried to strengthen the consumer protection as well as the prudential requirements that need to be put in place. What the regulator did was to try to improve consumer protection as well as to ensure that the non-bank business’ operations are not going to jeopardize the prudential stability of the whole financial system. In essence, the Ministry of Finance and Bank of Thailand set guidelines in terms of who (by minimum income) are legible to have credit cards and consumer loans as well as qualifications of companies that can provide credit card and consumer finance services, secondly the price or interest rate that can be applied on the consumers, and thirdly the reporting requirements that they are subject to, because in this way we can keep track of what they are doing and also to improve transparency to the public, to the society, and to the consumers as a whole. Some examples of good customer protection in financial services that I have seen are in the case of Singapore. With a growing, burgeoning growth of the hedge fund industry, the Singaporean government has decided to come out with the regulation to ensure justice and fair treatment of investors. Three parties are encouraged and involved in terms of protecting the investor interest. They are law firms to ensure that the management acts according to what they have disclosed in their advertisement when they tried to woo the investors. They have to work in accordance with the policy and the practice that they have laid out. The second group is insurance providers. The insurance company has to come in and provide insurance in case something goes wrong with the investment of the hedge fund to protect the investor interest. The third group is the auditing firm or the accounting firm which has to make sure that the reporting and the financial performance has been published according to the actual performance of the hedge fund. These are the examples of how the authorities can better protect consumers. In economic principle, when one think about consumer finance protection, there are ex-ante or pre-borrowing protection and ex-post post-borrowing protection. With regards to ex-ante of pre-borrowing consumer protection, one can argue that in some countries there are certain specific laws such as equal credit opportunity act meaning that everyone is entitled to receive credit no matter their religion, their origins, their sex, their racial status. Moreover, some laws like Fair Credit Report Act which our citizen is entitled to see what kind of reports about that credit standing, what kind of reports are being written on their credit standing, so they know their weaknesses and what they have to do to improve their credit standing and borrowing opportunities. The ex-post consumer protection can involve some forms of legal procedure and opportunity for those who are in debts to have a temporary relief or get out of the debt vicious cycle, the so-called bankruptcy solution. This is very popular in some countries like in Japan, there are many legal firms and lawyers who advertise their services for those who are in debts and can get out of the debts through services of these legal firms and lawyers. Also post or ex-post credit counseling can be in terms of credit counseling to give advice to those who are in debt because some people have psychological detriments when they incur debts, some people are addicted to borrowing and they are in a vicious circle of borrowing. Some forms of personal finance advices, some forms of counseling or education some times are needed to help these people. To have such a system would help considerably in trying to promote discipline among the borrowers and plan themselves to be able to pay debts properly. By: Dr. Chodechai Suwanaporn [email protected] Source: Fiscal Policy Office / www.fpo.go.th