As financial markets develop and deepen,one of the key issues for the fair, open and efficientoperation of the markets is the protection of consumers rights in financial services. Be they bank depositors orborrowers or investors in insurance policies, securities orinvestment or pension funds, financial consumers need theability to accurately understand the terms and conditions oftheir contracts and take action if the terms of contractshave been violated. The Note is the second report in a pilotprogram to analyze consumer protection infinancialservices.The objectives of the Note arethree-fold, to: (1) present a set of draft good practicesfor assessing consumer protection in financial services; (2)conduct a review of the existing rules and practices inSlovakia compared to the draft practices; and (3) providerecommendations on ways to improve consumer protection infinancial services in Slovakia. The Technical Notewasprepared at the request of the Slovak Ministryof Finance, with the valuable support of the National Bankof Slovakia and other government agencies, ministries, andnon-government organizations. In the past the World Bank hasalso prepared governance reviews of the Slovak financialsector for banking and private pension funds. Few guidelinesare available for consumer protection in financial services.Consumer protection in financial services remains a new anddeveloping area for which no consensus has developed on thebroad parameters against which a specific country might beanalyzed. This Note relied on the EU Directives related toconsumer protection and the reports of Europeanfinancialregulatory and supervisory agencies.Other sources were also used. In the United States, theFederal Trade Commission, the Securities and ExchangeCommission and other state, federal and self-regulatoryagencies have developed laws, rules and guidelines toprotect financial consumers. In addition, the 2003 OECDGuidelines for Protecting Consumers from Fraudulent andDeceptiveCommercial Practices across Borders andthe 1999 United Nations Guidelines for Consumer Protectionserved as useful reference points for general consumerprotection not related to the financial sector. Therecommendations in the Note go beyond the provisions of theEU Directives currently in force. As described in the EUConsumer Protection strategy announced in March 2007 and theApril 2007 Green Paper on Retail Financial Services,European financial consumers wouldbenefit fromstronger legal and institutional protections than arecurrently in place. Both in Europe and elsewhere,contemporary thinking on consumer protection is rapidlyevolving. The Technical Note takes into account theinternational discussion on financial consumer protectionand evolving good practices in financial consumerprotection. Thus, the Note presents recommendations that areapplicable to the Slovak financial sector, but in some casesgo beyondthe minimum requirements set by EU legislation.
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