G20 urged to live up to promise to consumers

Published on Wednesday 20 October 2010 22:49

WORLD leaders must keep their promises to protect consumers from the "abusive" practices of the financial services industry, international campaigners have demanded.

• Finance ministers, including Chancellor George Osborne, arrive for this weekend's G20 summit in South Korea Picture: Getty Images

G20 finance ministers meeting in South Korea this weekend should honour commitments made at last year's gathering in Pittsburgh to give consumers access to stable and competitive services, the campaigners said.

Pressure group Consumers International called for an expert group to be set up to help share best practice between developed and developing countries.

Head of campaigns Justin Macmullen said: "Consumers have had to put up with abusive practices from the financial services industry for too long and the global recession is making matters worse.

"At the G20 summit in Pittsburgh, world leaders made a commitment to 'protect consumers, depositors and investors against abusive practices and promote high quality standards'.

"Now it is time for them to turn their words in to action. Getting this right is not only vital to consumers, but also to stability in the world economy."

CI wants to see minimum standards set for fair contracts and charges, governance of national financial consumer protection bodies and the promotion of effective competition.

Owen Kelly, chief executive of trade body Scottish Financial Enterprise, said consumer protection was already a priority in the UK. He said: "The industry, government and regulators are working together on improvements to ensure we have better regulation, not more regulation.

"It is important to have consistency in delivering high standards for consumers around the world in an industry that operates globally."

UK consumer group Which, a member of CI, agreed that discussions needed to be carried out on a global level.

Dominic Lindley, Which's financial service sector principal policy adviser, told The Scotsman: "When it comes to regulating the banks and making sure they're not too big to fail, the decisions are being made internationally and we need to make sure consumers are protected.

"Issues such as banks' 'living wills' and how current account holders can be protected are being discussed at a global level."

He said issues such as protecting savers' deposits also crossed national boundaries, as illustrated by the collapse of the Icelandic banks in 2008.

Closer to home, Lindley said Which still had concerns over issues in the UK financial services sector, such as excessive charges for unauthorised overdrafts.

Following the loss of a UK Supreme Court case last year on "unfair" charges, Lindley said there were now lessons that could be learned from overseas. He pointed to the United States, where new legislation will crackdown on excessive credit card interest charges.

CI said it will keep up the pressure ahead of a further G20 summit of world leaders next month in Seoul.