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David M. Ortega Peciña – Organización de consumidores y Usuarios (Spain)

RUSSIA G20 Conference: “ Empower consumers of financial products and services thourgh imporved financial literacy / capability and effective consumer protection system ” Session 6: Disclosure and Transparency Moscow , 14 June 2013.

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David M. Ortega Peciña – Organización de consumidores y Usuarios (Spain)

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  1. RUSSIA G20 Conference: “Empowerconsumers of financialproducts and servicesthourghimporvedfinancialliteracy/capability and effective consumer protectionsystem” Session 6: Disclosure and Transparency Moscow, 14 June 2013 David M. Ortega Peciña – Organización de consumidores y Usuarios(Spain)

  2. Welostour home! I can’trepaymydebts! He didn’tknowhowmuchthecreditreallycosted! Theylosttheirsavings! She has no credit!

  3. Whyconsumersneedproperdisclosure • Information is one of the eight ‘legitimate consumer needs’ recognised by the UN Guidelines for Consumer Protection • Similarly, article 37 e), mentions that consumer education and information programmes should cover “…Information on weights and measures, prices, quality, credit conditions and availability of basic necessities”. • Catastrophicconsecuencesforconsumersifthey do nothavetherightinformationtomaketherightchoices

  4. Whyconsumersneedproperdisclosure • A case studyfrom Spain: the “preferred shares” scandal • http://www.youtube.com/watch?v=sFNneZLoz8E • Some highlights: • Almost 1,000,000 affected people • Losses of about 75% of initial investments • “Troika” MoU imposes loses to be born not only by taxpayers but also by equity holders • Typical savers were transformed into equity holders and therefore not covered by deposit guarantee schemes anymore

  5. Whyconsumersneedproperdisclosure • Howmuchdidpeople lose?

  6. Disclosureprinciples • CI’s requirements for consumer information are that it be: clear, sufficient, reliable, comparable and timely, suitable in these respects for the consumer to compare and contrast and to make an informed decision. • Consumer creditinformation • Key-factStatements

  7. Disclosureprinciples • OECD’s high level principles: • Financial services providers and authorised agents should provide consumers with key information that informs the consumer of the fundamental benefits, risks and terms of the product. • They should also provide information on conflicts of interest associated with the authorised agent through which the product is sold.

  8. Disclosureprinciples • OECD’s high level principles (2): • The provision of advice should be as objective as possible and should in general be based on the consumer’s profile considering the complexity of the product, the risks associated with it as well as the customer’s financial objectives, knowledge, capabilities and experience. • Consumers should be made aware of the importance of providing financial services providers with relevant, accurate and available information.

  9. Disclosureprinciples • Possibleconflicts of interest: • Sales incentives • Prudentialissues

  10. Disclosureprinciples • EU proposals on the pipeline: • Regulation on Key Information Document for Investment Products (KID) • MiFID 2

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