The "Guidance to Supervisors in the Field of Digitalisation of Short-Term, High-Cost Consumer Credit," published by FinCoNet in February 2019, addresses the evolving landscape of short-term, high-cost consumer credit (STHCCC) as it transitions into digital channels. Recognizing that digitalisation can both enhance access to credit and introduce new consumer risks, the guidance emphasizes the need for supervisors to adapt their oversight strategies accordingly.
The guidance outlines eight key areas for supervisory focus:
Comprehensive Regulatory Framework: Ensuring all forms of digital STHCCC and their providers are effectively regulated.
Appropriate Oversight Tools: Utilizing effective tools to oversee digital STHCCC providers.
Consumer Recourse Mechanisms: Guaranteeing consumers have access to effective complaint and redress systems.
Disclosure of Information: Ensuring clear, transparent, and timely information is provided to consumers.
Assessment of Consumer Interests: Evaluating whether credit products align with the genuine needs and interests of consumers.
Prevention of Over-Indebtedness: Implementing measures to prevent consumers from taking on excessive debt.
Security Risks and Data Privacy: Addressing potential security threats and ensuring the protection of consumer data.
Digital Financial Literacy: Promoting consumer understanding of digital credit products and associated risks.
By focusing on these areas, the guidance aims to equip supervisors with a framework to enhance consumer protection and ensure responsible lending practices in the digital age.
