Protection & Financial

Case of Credit

Analysis & conclusions set forth in this presentation represent the opinion of the author solely and do not indicate concurrence of the Banque Du Liban, or any other official entity. Mention of any course of action or procedure followed by Banque Du Liban, or any other entity does not constitute an endorsement or criticism to such action or procedure. Context -- Global Cross border aspect of financial services

Variety and complexity of financial products

Rising* consumer debt

Lack of clarity and transparency

Improper risk assessment

Relatively low financial literacy

Changing retirement schemes and ageing populations

Consumer Education & Financial Education: A Credit Case – Ghide 10/20/201 2 Sleiman 0 Stakeholders

Consumer

Facilitator

Embassies Municipalitie Financial s Institution s

Ministries Media Community Educational Intermediaries Bodies (NGOs, Regulator (Schools, Unions, s Universities) Syndicates..)

Consumer Education & Financial Education: A Credit Case – Ghide 10/20/201 4 Sleiman 0 Role of Banque du Liban (BDL) Maintain a Healthy and Stable

Financial System and Economy*

Maintain a balanced free market

Strengthening confidence in the Financial Services Sector/Market as a whole Improve relationship among stakeholders, mainly: Financial Institutions and

*(art. 70, Law of Money and Credit) Consumer Education & Financial Education: A Credit Case – Ghide 10/20/201 5 Sleiman 0 Required Framework in a Free Market

Redress • Suitable control and appropriate penalty Mechanis • Ombudsman m

Financial Educatio n*

• Information Consumer • Instruction Protection • Advice • Licensing • Suitability of products • Fit and proper employees *OECD publication: Improving • Transparency/Disclosur Financial Literacy. (2005). e Consumer Education & Financial Education: A Credit Case – Ghide 10/20/201 6 Sleiman 0 Transparency Project at BDL

Banks’ Main products Clear, Comprehensive & Not Informed Client Misleading Communication

Credits Real Time Promotion

Rational Deposits Agreements Decisions

Investments Statements

Consumer Education & Financial Education: A Credit Case – Ghide 10/20/201 7 Sleiman 0 Local Example -- Ads Promoting Non-Financial Features of Financial Products In Your Heart …And on Your Card

Photo option Mirror option Consumer Education & Financial Education: A Credit Case – Ghide 10/20/201 8 Sleiman 0 Local Example -- Agreements

Consumer Education & Financial Education: A Credit Case – Ghide 10/20/201 9 Sleiman 0 Local Example -- Agreements

Consumer Education & Financial Education: A Credit Case – Ghide 10/20/201 10 Sleiman 0 Transparency in Credit Directive Reinforced pillars of a clear, comprehensive and not misleading communication Detailed description of Itemisation of Governing Periodic update products and cost structure conditions services

Amount Interest Grace period Variable rates

Fees & Early Currency charges repayment Annual Balances statement Maturity Insurance calculation Payment Periodic Instalments Collaterals allocation statement

Consumer Education & Financial Education: A Credit Case – Ghide 10/20/201 11 Sleiman 0 Transparency in Credit Directive Addressed critical reoccurring issues

No untrue claims: • Guaranteed loan 3-day withdrawal period Validity of information • Pay at your (expiry date if any) to review contract and retreat if inconvenient • No advance payment

Cases of contract Termination of contract: amendments clearly Alleviated restrictions only due to client spelled out, & on choice of insurance breach of contract, and communicated to client provider after sending a warning one month before to client implementation

Consumer Education & Financial Education: A Credit Case – Ghide 10/20/201 12 Sleiman 0 Transparency in Credit Directive Added Standardized Concepts

Annual Percentage Rate • A standard measure which expresses the total charges for credit and that borrowers can use to compare the credit charges of one deal with another Mandatory Risk Statements • Help the client better understand the risks involved when committing to the offered credit product Summary box • Main features of a credit card Single Terminology Across All Types of Communication • Fixing terminologies and concept for client to be able to compare

Consumer Education & Financial Education: A Credit Case – Ghide 10/20/201 13 Sleiman 0 Conclusion

Promote Financially Empowered Individuals

Consumer Education & Financial Education: A Credit Case – Ghide 10/20/201 14 Sleiman 0 Appendix -Financial Awareness Program Outcome

A “Kaddeer” consumer

financially educated and can make financially responsible decisions

bac k 15