FinCoNet Report on the Digitalisation of Short-Term, High-Cost Consumer Credit
Established in 2013, FinCoNet is a non-profit international organisation of supervisors and public entities with a financial market conduct and financial consumer protection supervision mandate. It was established in response to the growing focus in financial consumer protection worldwide, and the need for better coordination among supervisory bodies responsible for the oversight of the various national financial consumer protection regimes. The work of FinCoNet is currently focused on consumer credit and banking issues, aiming to strengthen consumer confidence while reducing systemic risk.
Given its mission, FinCoNet decided to address the growth of short-term, high-cost lending provided through digital channels. This has indeed resulted in new challenges for supervisory authorities around the world as well as for consumers. While innovation comes with many benefits, it can also present new risks to financial consumers. It can expose them, inter alia, to poor lending practices, inadequate disclosure and confusing dispute resolution processes.
The FinCoNet Report on the Digitlisation of Short-Term, High-Cost Consumer Credit represents the output of a detailed survey of supervisors in 25 jurisdictions on the Digitalisation of Short-term High-cost Consumer Credit, undertaken in March 2017, as well as a review of international literature published on this topic to date. It forms part of FinCoNet’s continuing work on responsible lending and on digitalisation, building on FinCoNet’s previous published reports on those topics. Based on the findings of this Report, FinCoNet has identified a number of topics that are particularly relevant for supervisors to consider in their design of a responsible lending regime in relation to the digitalisation of short-term, high-cost consumer credit.Consistent with its mission, FinCoNet will continue the analysis of this trend and work on the development in the course of 2018 of Guidance for supervisors on the setting of standards in the field of digitalised short-term, high-cost consumer credit. The development of such Guidance will also involve consultations with stakeholders involved in this field on these topics, including consumers’ representatives and international organisations and standard-setting bodies.