FinCoNet publishes a Consultation Paper on Guidance to supervisors in the field of digitalisation of consumer credit

The consultation paper results from the work carried out by a FinCoNet committee chaired by Banco de Portugal, with the participation of the supervisors from Australia, Brazil, Canada, China, Germany, Indonesia, Ireland and the United Kingdom. This Committee's analysis resulted in the report Digitalisation of Short-term, High-cost Consumer Credit, published by FinCoNet in November 2017.

Digital channels enable consumers' easy, quick and comfortable access to credit products, thus enhancing financial inclusion. However, the marketing and selling of credit products through these channels poses some risks as well, and it may increase credit-related risks, such as the risk of consumers becoming over-indebted.

The consultation paper on guidance aims at ensuring:

• a comprehensive and extensive regulatory framework, covering all types of STHCCC and all providers and credit intermediaries;

• appropriate oversight tools;

• consumer access to recourse mechanisms, including complaints handling and independent alternative dispute resolution mechanisms;

• disclosure of clear, transparent and complete information, at the pre-contractual stage, over the lifetime of the agreement and in advertising;

• that providers take into consideration the interests, objectives and characteristics of the target market and assess whether the features of the STHCCC are suitable and appropriate for a consumer's needs and financial situation;

• targeted prevention of consumer over-indebtedness;

• the mitigation of security risks and data privacy;

• digital financial literacy.

Public consultation process

The consultation paper can be found here.

The deadline for the submission of comments is 18 January 2019. Respondents are requested to provide their contributions by using the template file and sending it via e-mail to [email protected].

About FinCoNet

FinCoNet is an international organisation of supervisory authorities which have responsibility for market conduct in the sale of retail banking products. Its main goal is to improve the protection of banking product customers.

Banco de Portugal, as banking conduct supervisory authority, is a founding member of FinCoNet and member of its Governing Council, presently holding the Vice Chairmanship.