In March 2021, the G20/OECD Task Force on Financial Consumer Protection and FinCoNet convened an international seminar to explore the application of performance-based regulation (PBR) in financial consumer protection. The seminar aimed to discuss how PBR, which focuses on achieving specific outcomes rather than prescribing detailed processes, can enhance consumer protection in the financial sector. This approach encourages financial institutions to innovate and develop practices that effectively meet regulatory objectives while ensuring consumer interests are safeguarded.
Professor Lauren E. Willis from Loyola Marymount University delivered a keynote presentation titled "Performance-based Consumer Law: Bringing Consumer Transactions in Line with Consumer Expectations." She highlighted the limitations of traditional disclosure-based regulations, noting that they often fail to align financial products with consumer needs and expectations. Professor Willis advocated for a shift towards PBR, where regulators set clear, outcome-based standards that financial service providers must achieve, thereby ensuring that products and services deliver tangible benefits to consumers.
The seminar also featured a panel discussion with representatives from various regulatory bodies and financial institutions. Panelists shared insights on implementing PBR frameworks, discussing challenges such as defining measurable outcomes, monitoring compliance, and balancing flexibility with accountability. The consensus underscored that while PBR offers a promising avenue for enhancing financial consumer protection, its success hinges on robust oversight mechanisms and a clear articulation of desired consumer outcomes.
