There are plausible ways to improve and strengthen consumer protection for users in financial services. If we look at the parties involved in the consumer protection mechanism, we will see that we have consumers and investors on one end and we have financial services providers on the other end. And the party that has to bridge or try to balance the powers or the equality between the depositors, investors, and consumers and the financial services providers, the investment companies, would have to be the regulator and the supervisor. How can we promote, strengthen, and support the mechanism to balance the power of the two? I would like to offer some specific suggestions through strengthening and augmenting the roles of various related groups to consumer protection. The first group is the so-called consumer activist or consumer advocate groups. These are also important because they are the ones to be alert and keep close watches on how consumers are treated—whether the companies are responsible and fair for consumers as well as are accountable for their actions and for their liabilities. Therefore, we should try to promote the role of consumer groups in a systematic manner. The second group would be the credit rating and credit scoring companies or mechanism, which I think are extremely important to ensure a fair assessment and analysis of credit standing and the credit availability to proper consumers. Therefore, I think we should promote and put in place a system-wide and efficient credit scoring mechanism. The third group is the lawyers group. I think we have to see to it that their role is functioning properly and not being abused because it is very important to ensure that legal protection is given to consumers in an appropriate manner but not costly and creating moral hazard. The fourth group will be the credit counseling group. We need to have some more formal and informal channels where the people who are suffering from excessive borrowing or having credit problems can resort to some kind of remedial and counseling alternatives. So this is very important to help lessen the impacts of the problems as well as try to restore discipline and normalcy for the consumers. The fifth one is the importance of the appropriate legal framework. For example, the role of equality in terms of credit opportunities that has to be given to consumers as much as possible. Although these are not perfect solutions and answers for consumer protection, it will help considerably if we try to promote equal credit opportunities regardless of origin, race, sex, and age. I think consumers are entitled to this kind of equal treatment. The sixth one is the role of prior credit reports. The consumer needs to know their current standing, what are the problems, why are they denied credits, and what can they do to improve their credit opportunities. The seventh one I look at how some other countries like Australia have a separate organization to be responsible for consumer protection of financial products and services. In Australia there is an institution called Australian Securities & Investment Commission (ASIC), which is a sister organization to the integrated financial regulator called Australian Prudential Regulation Authority (APRA). This organization is specifically tasked to help lay out guidelines, codes of conduct, and specific regulation concerning the transparency, disclosure and fair treatment of consumers. The last one is to have anti-monopoly regulation on finance industry, which I think may be needed if financial services providers could merge and become much bigger to the extent that they could form a monopolistic power over the market and consumers. Without proper prevention and control, they could jeopardize the justice and fair treatment that they should give to the consumers. By: Dr. Chodechai Suwanaporn [email protected] Source: Fiscal Policy Office / www.fpo.go.th