Financial Crime World

Mozambique’s Financial Consumer Protection in Jeopardy

A Review of the Banking Sector Reveals Concerns Over Lack of Effective Consumer Protection Measures

The Banking and Monetary Authority (BdM) is responsible for ensuring that financial institutions operate fairly and transparently in Mozambique. However, a recent review of the banking sector has raised concerns over the lack of effective consumer protection measures in place.

Weaknesses in the Current System

  • The BdM’s capacity to monitor and enforce consumer protection laws is limited.
  • There is a lack of clear institutional arrangements in place to address market conduct issues.

To strengthen consumer protection, experts recommend establishing a new financial consumer protection unit within the BdM. This unit would be responsible for:

  • Monitoring and supervising consumer protection provisions
  • Handling complaints
  • Ensuring adequate attention is given to market conduct issues

Strengthening Regulatory Bodies

In addition to establishing a new financial consumer protection unit, the roles of other regulatory bodies need to be further strengthened.

  • The Banking and Securities Commission (BSD) should have a designated team responsible for financial consumer protection.
  • The General Inspectorate of Finance (GPI) should also have a designated team to address consumer complaints and promote financial literacy.

Task Force for Consumer Protection

The establishment of a consumer protection and business conduct task force, comprising representatives from GPI, BSD, and other relevant stakeholders, could help clarify roles and responsibilities in the financial sector.

Constitutional Obligations

Mozambique’s State has a constitutional obligation to provide assistance to consumer associations and support their initiatives in respect of consumer training and education. However, these rights and obligations are not being honored, leaving consumers vulnerable to exploitation.

Key Recommendations

To address these concerns, it is essential that Mozambique’s government takes concrete steps to strengthen its financial regulatory framework and ensure that consumers are protected from unfair business practices.

  1. Establish a new financial consumer protection unit within the BdM.
  2. Strengthen the roles of BSD, GPI, and other regulatory bodies in addressing market conduct issues.
  3. Establish a consumer protection and business conduct task force to clarify roles and responsibilities.
  4. Ensure that the State honors its constitutional obligations to support consumer associations.
  5. Implement measures to enhance financial literacy and education among consumers.

By implementing these recommendations, Mozambique can ensure that its financial sector is fair, transparent, and responsive to consumer needs, ultimately promoting economic stability and growth.