What have regulators done to help consumers?
In the wake of the financial crisis, many regulatory bodies have sprung up. The goal? To find out how risky banks are, maintain market confidence and reduce financial crime. Crucially, however, is the role they play in consumer protection. Most recently, the Bank of England’s (BoE) internal watchdog has been called into question, mainly regarding its lack of activity. Here’s a breakdown on what regulatory bodies around the world have been doing to help consumers.
The BoE’s Independent Evaluation Office (IEO) was set up in November 2014, to build public trust in the Bank. While little has been done on this front, it has, however, helped the Bank redraft its annual report and supported a review of monetary policy. Nevertheless, the UK’s Financial Conduct Authority (FCA) made some big decisions last year. The FCA gave RBS, Ulster Bank and NatWest a £42m fine for IT failures which stopped customers from accessing bank services. This has really set an example to other banks, proving the importance of maintaining services to consumers.
The FCA’s equivalent in the US is the Consumer Financial Protection Bureau (CFPB). It aims to educate and empower consumers as well as enforce rules and regulations. Most recently, the CFPB aided the Justice Department in its investigations against mortgage lender, Provident, for its alleged discriminatory lending practices towards African-American and Hispanic customers. A settlement of $9m in compensation will soon be placed in a fund for the victims and should help ensure fair lending practices in the future. The latter, of course, will need to be rigorously policed.
Looking to China, the National Development and Reform Committee recently launched an investigation on potential monopolies in the shipping industry. This matters because if such monopoly behaviour does exist, this could potentially drive up consumer prices unfairly. In 2012, Japan’s financial regulator, the Fair Trade Commission, led a similar investigation which resulted in a huge 13.1bn yen ($106m) fine for some key players in the industry.
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