A framework for consumer protection (summary)

Finansinspektionen (FI) works to ensure that the financial system is stable and characterised by high confidence. It should also have well-functioning markets that meet the needs for financial services while at the same time ensuring a high level of protection for consumers. This requires stable financial firms, clear information for consumers and consideration for consumers' needs and circumstances when developing and selling products.

Summary

Consumers on the financial market need to be protected since financial decisions are difficult to evaluate and can have a major impact on their finances. In the long run, this could also lead to costs for society as a whole. Consumer protection is also necessary to safeguard a fundamental confidence in the financial system. In this report, FI formulates a framework for how the authority views its assignment for consumer protection. This view is based on FI's instructions, FI's experiences in its financial supervision and conclusions drawn from academic research.

Ultimately, the objective of FI's work with consumer protection is the same as for its work in general: to ensure that the financial system, i.e. the financial market and financial firms, function well and meet the needs of the market. For consumers, this means that they should be offered suitable, cost-efficient financial products and services. In other words, these products and services should be adapted to the needs and circumstances of consumers while costs are proportionate to the value for consumers. According to FI, a high level of consumer protection requires three general conditions to be fulfilled:

  • Consumers' assets with financial firms are secure, and the firms follow signed agreements that have reasonable terms and conditions.
  • Consumers receive relevant and comprehensible information.
  • Financial firms demonstrate that they are mindful of consumers' interests and consider consumers' needs and circumstances.

To achieve this objective, FI grants authorisation to firms that want to conduct financial operations, supervises these firms and issues regulations. All of these tools require that FI clearly communicate what the authority expects from the financial firms. It is a natural part of a modern consumer protection to clearly emphasise the importance of firms considering the needs and circumstances of consumers; both when developing financial products and when providing consumers with information. This complements FI's ambition to conduct a more communicative supervision.

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