Mozambique’s Financial Consumer Protection: A Call for Strengthened Institutional Arrangements

Maputo - The financial sector in Mozambique has been plagued by a lack of consumer protection, with few exceptions to the numerous rights and obligations enshrined in law. Despite the existence of a regulatory body, the Banco de Moçambique (BdM), it is clear that more needs to be done to ensure that consumers are protected from unfair business practices.

The Need for Strengthened Institutional Arrangements

A recent report has highlighted the need for strengthened institutional arrangements to effectively monitor and enforce consumer protection provisions. One of the key recommendations is the establishment of a new financial consumer protection unit within the BdM, responsible for monitoring, supervising, and enforcing consumer protection provisions as well as handling complaints.

Proposed Solutions

• Establish a new financial consumer protection unit within the BdM to monitor, supervise, and enforce consumer protection provisions.
• Separate prudential supervision from market conduct issues to ensure adequate attention is given to both.
• The Government’s Institute of Financial Services (GPI) would remain responsible for financial literacy and education.

Interim Steps

As an interim step, the roles of the Banking and Savings Development (BSD) and GPI should be further strengthened. Specifically:

• BSD: Establish a designated team within each supervisory division responsible for financial consumer protection.
• GPI: Build capacity of the team responsible for consumer complaints and financial education.
• Provide training and increased resources to all staff involved in consumer protection and financial literacy.

International Experience

The international experience indicates that a strong regulatory body is essential for effective consumer protection. It is crucial that the BdM, as the governing body, is freely elected via universal secret ballot cast by all its members to ensure accountability and representation of all stakeholders.

Conclusion

In conclusion, it is imperative that Mozambique’s financial sector prioritizes consumer protection, strengthening institutional arrangements to effectively monitor and enforce consumer protection provisions. The proposed measures are a step in the right direction towards ensuring a more transparent and accountable financial system.