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Financial Inclusion and Consumer Protection in Peru: The Branchless Banking Business

A joint report by the Superintendency of Banks of Peru (SBS) and the Consultative Group to Assist the Poor (CGAP)

In recent years, branchless banking has become a significant player in Peru’s financial market. This innovative model has brought about greater access to financial services for low-income individuals and small businesses. However, it also raises concerns about consumer protection and transparency.

Protecting Personal Data

Peru’s laws provide a framework for the protection of personal data. Law 27269/28 deals with electronic contracts, allowing the use of digital certificates and signatures. The law clarifies that digital signatures can be rescinded if the information they contain is false or modified, or if the signature holder does not comply with the rules of the certifying agency.

Recourse and Disclosure of Complaint Information

Financial institutions in Peru are required to establish a specialized unit to handle customer complaints and questions. They must also designate a customer care officer to head this unit and be accountable for regulatory compliance and reporting to SBS.

  • The Transparency Resolution sets minimum requirements for customer care units, which must be regularly evaluated by the internal auditor.
  • Financial institutions must post statistics about complaints on their websites in a standardized format dictated by SBS. This information is also reported quarterly to SBS and posted on its website.

Supervision and Sanctioning Powers

SBS and Indecopi have supervisory and sanctioning powers with regard to financial transparency regulation and consumer protection law, respectively. There is a good degree of coordination between the two agencies in publicizing complaint information.

  • SBS does not solve consumer complaints but regulates and supervises the policies and procedures set by financial institutions to receive, manage, and properly solve complaints.
  • SBS has established a specialized unit and team of supervisors to deal with consumer protection and transparency issues within the regulated market.

Exhibit 3: SBS’ Organizational Structure for Consumer Protection

Source: SBS presentation at the Global Seminar on Consumer Protection and Financial Literacy, World Bank, Washington, DC, September 2008

To reduce the incidence of consumer disputes, SBS uses a mix of preventive and corrective actions. These include:

  • Monitoring news in the media to inform corrective actions and business conduct trends
  • Analyzing complaint statistics to inform supervisory and regulatory actions
  • Creating and deploying a risk-matrix (Consumer Risk Model)
  • Standardizing disclosed information
  • Making onsite inspections
  • Promoting financial education
  • Other initiatives linked to financial capability

In 2008, SBS conducted 257 branch visits in 13 departments in Peru. Offsite activities focus on:

  • Checking websites of financial institutions regularly
  • Analyzing mass media campaigns and ads, price lists, and complaint statistics

Conclusion

Peru’s financial inclusion and consumer protection framework provides a solid foundation for the branchless banking business to thrive while protecting consumers’ interests. SBS plays a crucial role in regulating and supervising financial institutions to ensure transparency and fairness in their dealings with customers. By promoting financial education and other initiatives linked to financial capability, Peru is well on its way to becoming a model for financial inclusion and consumer protection in the region.