Ghanaian Consumers Demand Independent Financial Regulator

By Jean Lukaz MIH

On March 15, World Consumer Rights Day (WCRD) 2011, consumers in Ghana are adding their voices to the global campaign for fair financial services. The Consumer Partnership (The COP), in a move to restating the previous year’s concerns about the vulnerability of a borrower beware (caveat emptor) situation to shift to a lender beware (‘caveat venditor’) approach, is advocating for an independent financial regulator in Ghana far from the Bank of Ghana and its insider Investigation and Consumer Reporting Office (ICRO).

According to the World Bank/CGAP, there are as many bank deposit accounts in the world as there are adults. And yet, over half the adults in the world are ‘unbanked’ and 150 million new consumers join the market for financial services every year.

Consumers International (CI), the global voice for consumers around the world has issued a set of international recommendations for strengthening consumer financial protection to G20 leaders, the Financial Stability Board, the OECD and the World Bank.

The report, Safe, fair and competitive markets for financial services: recommendations for the G20 on the enhancement of consumer protection in financial services, calls for the establishment of ‘mandatory financial consumer protection bodies: national regulators with full authority to investigate, halt and remedy violations of consumer protection law, including, where necessary, the right to define specific practices or products as unfair, deceptive or otherwise illegal’. Among the recommendations are also the following related to consumers and their patronage of financial services:

1. Information design and disclosure
2. Contracts, charges and practices
3. The structure and functions of national financial consumer protection bodies
4. Redress and dispute resolution systems
5. Promoting competition in financial services
6. Measures to promote stability and safety of consumers deposits and investments
7. Access to basic financial services and the role of new forms of service.

According to Consumers International Director General, Joost Martens, "These ground-breaking recommendations are the product of a shared sense of anger within the consumer movement that the rights of financial consumers have been neglected for too long. They provide a clear and comprehensive set of demands for significantly improving financial protection for consumers everywhere."
The financial crisis dramatically illustrated that weak consumer protection poses a significant risk to the wider economy as intimated by Sheila Bair, the Chair of the US Federal Deposit Insurance Corporation, “There can no longer be any doubt about the link between protecting consumers from abusive products and practices, and the safety and soundness of the financial system”.


As part of her development support, the German government and its development agency Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) awarded a project to GOPA in Ghana from November 2010 to June 2013 to help streamline the microfinance sub-sector through Responsible Finance, one of its components. This is aimed at Banking Supervision, Financial Literacy and Consumer Protection and consists of technical advice, training and mentoring for the management and technical staff of the Bank of Ghana, the ARB Apex Bank and CUA in the areas of strengthening the supervision and internal controls of rural banks and credit unions as well as improving the consumer protection in the financial sector. It includes, above all, support to the planning and implementation of the institutional reorganisation of the banking supervision (incl. the corresponding consultation processes), technical support to the merger of selected rural banks and credit unions, and the strengthening of the Investigation and Consumer Reporting Office of the Bank of Ghana.

In as much as this is laudable, The Consumer Partnership believes that much more is required of the government of Ghana to show her commitment to protecting Ghanaian consumers from a product as complex as financial services. Over-reliance on consumer education, which is a necessary but wholly insufficient response to the problem, has not solved the case of weak financial consumer protection that is a problem commonly shared by consumers in countries with well-established financial services as well as consumers in countries where the sector is relatively new.