This FinCoNet consultation paper addresses the consumer protection challenges arising from the digitalisation of short-term, high-cost consumer credit (STHCCC) products. While digital channels offer benefits such as increased accessibility and convenience, they also introduce risks that can amplify existing consumer protection concerns. The paper emphasizes the need for supervisors to adapt their regulatory and oversight approaches to effectively mitigate these risks and promote responsible lending practices.
The guidance comprises eight key topics: establishing a comprehensive regulatory framework, developing appropriate oversight tools, ensuring consumer access to recourse mechanisms, enhancing information disclosure, assessing consumers' interests, preventing consumer over-indebtedness, addressing security risks and data privacy, and promoting digital financial literacy. Each section outlines specific supervisory actions that can be implemented to address the unique challenges posed by the digitalisation of STHCCC. The paper underscores the importance of supervisors staying abreast of technological advancements to ensure effective consumer protection in this evolving landscape.
