Financial Crime World

Here is the converted article in markdown format:

Mozambique’s Financial Consumer Protection Structure in Need of Overhaul

===========================================================

Maputo - Mozambique’s financial consumer protection structure is in dire need of reform to effectively safeguard the rights of consumers. A recent assessment has revealed that the current system is plagued by inefficiencies and a lack of transparency.

Current Challenges

The Bank of Mozambique (BdM) is responsible for regulating the country’s financial sector, but its capacity to monitor and enforce laws requiring standards of business conduct is severely limited. The BdM’s Governance and Institutional Development Division (GIDD) is tasked with promoting financial consumer protection, but it lacks the necessary resources and expertise.

Lack of Transparency

The current system also lacks a dedicated unit for monitoring and enforcing consumer protection provisions, making it difficult to handle complaints and ensure that financial institutions comply with regulations.

Recommendations for Reform

Experts have recommended several measures to strengthen Mozambique’s financial consumer protection framework:

Establish a New Unit

Establish a new financial consumer protection unit within the BdM. This unit would be responsible for monitoring, supervising, and enforcing consumer protection provisions, as well as handling complaints.

Strengthen Existing Roles

Strengthen the roles of the Banking Supervision Department (BSD) responsible for misleading advertisements, fees, and charges, and the Government’s Institute of Financial Services (GPI) in charge of financial education and consumer complaints.

Create Designated Teams

Create designated teams within each supervisory division of BSD, responsible for financial consumer protection. Additionally, build further capacity of BdM’s GPI team responsible for consumer complaints and financial education.

Establish a Task Force

Establish a consumer protection and business conduct task force consisting of the Heads of Department of GPI and BSD, as well as GPI staff in charge of financial consumer protection and representatives of BSD. This would provide clarity on the supervision of financial consumer protection laws and regulations.

International Best Practices

Experts believe that international experience suggests that a dedicated unit for financial consumer protection is essential to ensure that consumers are protected from unfair practices by financial institutions. The current system falls short of meeting this standard, and urgent reforms are needed to safeguard the rights of Mozambique’s citizens.

Key Recommendations

  1. Establish a new financial consumer protection unit within the BdM.
  2. Strengthen the roles of BSD responsible for misleading advertisements, fees, and charges, and GPI in charge of financial education and consumer complaints.
  3. Create designated teams within each supervisory division of BSD, responsible for financial consumer protection.
  4. Build further capacity of BdM’s GPI team responsible for consumer complaints and financial education.
  5. Establish a consumer protection and business conduct task force to provide clarity on the supervision of financial consumer protection laws and regulations.

Call to Action

The Mozambican government must take immediate action to reform the country’s financial consumer protection structure to ensure that consumers are protected from unfair practices by financial institutions.