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General Principles on Consumer Protection Policy at ASF Level

 

Purpose and field of application

Through Consumer Protection Policy, we aim to strengthen the integrated organizational framework necessary for the development of the ASF programs in the field of consumer protection and financial education, through preventive monitoring and warning actions on potential violations of consumers' rights and interests, and through reactive actions following supervision, control and settlement of petitions.

In this context, ensuring the protection of consumers of non-bank financial services, together with maintaining the stability of the three supervised markets, configures our entire strategy, around which all the powers and competences conferred by the legal framework are circumscribed.

Also, by proactively targeting the whole of the ASF activity by further strengthening the risk-based oversight both from the perspective of prudential and behavioural surveillance, as well as through the implementation of new consumer specific legislation (MIFID II, IDD) we ensure the adaptation and continuous development of the consumer protection function.

Activities aiming to protect consumers at ASF level are in line with the general principles imposed at the level of European authorities and support the organization and development of a stable regulatory and supervisory framework.

Depending on the evolution of the markets, the continuous improvement of the consumer protection activity and the updating of the levers and the ways in which the actions are carried out are a permanent concern of the Financial Supervisory Authority.

Thus, all organizational structures within the ASF have the intrinsic purpose of protecting consumers by addressing unitarily the regulatory and supervisory aspects of the activity of regulated entities and by ensuring financial discipline, of compliance with the rules of conduct and their transparency.

By monitoring activities that constitute abusive or misleading practices of non-bank financial services providers and providing mechanisms to ensure knowledge of financial products and consumer rights for informed decision-making, we aim to create an appropriate framework for increasing consumer confidence and implicitly for the development of non-banking financial markets.

The general principles on Consumer Protection Policy at ASF level comply with the legal provisions in force and support the activity of consumer protection in all its aspects.

Objectives and principles

At an integrated level, the major objectives enshrined in the provisions of the Emergency Ordinance no. 93/2012 on the establishment, organization and functioning of the Financial Supervisory Authority, approved with amendments and completions by Law no. 113/2013, as subsequently amended and supplemented, and by the provisions of the sectoral financial supervision legislation, shall take into account:

  • ensuring the stability, competitiveness and proper functioning of financial instruments markets, promoting trust in these markets and investing in financial instruments, as well as ensuring the protection of operators and investors against unfair, abusive and fraudulent practices;
  • promoting the stability of the insurance business and safeguarding the rights of policyholders;
  • ensuring the efficient functioning of the private pension system and protecting the interests of the participants and beneficiaries.

The general principles underlying this Consumer Protection Policy for financial products can be summarized as follows:

  1. Ensuring fair and correct treatment to consumer - This goal must be an integral part of the governance and organizational culture of non-bank financial services providers. Effective consumer protection implies fair and correct treatment both from the financial service provider and from the competent authority. In order to meet the ultimate goal of protecting the consumer, normative acts contain strict and clear rules both on the organization and functioning of supervised entities and on the observance of some standards of conduct;
  2. Ensuring transparency - Consumers need to be fully informed, accurate and precisely about the benefits, risks and significant features of the financial products / services they intend to contract in order to support a decision that best suits their needs and interests;
  3. Financial education and awareness - developing appropriate mechanisms to help potential and existing consumers to improve their knowledge and skills, in order to properly understand the risks and make informed choices; financial service providers must ensure that information on consumers' rights and obligations is clear and easy to understand and presented in a form accessible to them;
  4. Observing the rules of conduct - pursuing the best interests of the consumer and avoiding or preventing conflicts of interest; The new supervisory approach implies both risk monitoring, prospective and proportionate, as well as checking compliance with compliance with the rules of conduct. By ensuring the convergence of supervisory processes and practices, we build the necessary premises to ensure better consumer protection;
  5. Protecting consumers against abusive or misleading practices - making relevant information available to consumers and setting up internal verification and control procedures designed to insure protection against fraud and deception of any kind;
  6. Managing petitions of non-bank financial products consumers - providing an affordable filing mechanism and respectively handling complaints and referrals, both at financial service providers and at the A.S.F. level.

Sectorial Measures

By implementing the technical standards adopted by the European authorities in the field of financial services, ASF ensures the harmonization of legislation and best practices for the protection of consumers of non-bank financial products in Romania and thus contributes to the consolidation and integration of the supervised financial markets within the European single market. Thus, in order to meet the objective of protecting consumers of non-banking financial products, ASF carries out:

  • preventive activities of information, identification and monitoring of potential deficiencies in the activity of supervised entities, transmission of alerts to the attention of consumers
  • reactive activities through the provision of an action plan, interventions regarding the suspension or prohibition of the distribution of financial products, the settlement of petitions addressed to the authority by consumers, according to the provisions of the Government Ordinance no.27 / 2002 regarding the regulation of the petitions settlement activity, approved by Law no.233 / 2002 and the incidental legislation in the specialized field of ASF.

Therefore, Consumer Protection is intrinsically linked to market surveillance activity in order to identify practices that do not meet legal requirements and to eliminate the supply or distribution of financial services and products that do not meet the required and / or declared requirements.

Financial innovation and the digitization of financial services contribute to the development of the markets but at the same time present new specific risks and challenges and imply the identification of appropriate measures to ensure an adequate degree of investor protection.

ASF is constantly considering these risks, tackled with priority inside  InsurTech HUB group coordinated by the ASF, providing support for know-how and education in the field, promoting the elimination of legislative barriers, the creation of a testing environment and the application of European protection requirements against cyber risks, by synchronizing with the approaches taken at European level in the field, including by educating the Romanian companies on the risks and benefits of such insurance.

Specific actions and conclusions

The ASF provides the necessary mechanisms for the smooth functioning of non-banking financial markets, the stability and integrity of the financial sector in general, choosing to be a future-oriented authority and combining in the supervisory act the principles on which consumer protection is based, respect for innovation and the approach based on risk. For this purpose, in order to promote healthy market development and to enhance consumer protection, the main regulatory and supervisory functions have been reviewed and optimized through a unitary approach of some processes and the introduction of new tools for identifying and mitigating risks.

Also, in order to improve subordinated activities to the consumer protection function, ASF further ensures the upgrading of complaints management, issuing warnings and alerts in situations considered hazardous to consumers, improving the SAL-FIN dispute resolution framework, developing and making available guides and brochures with specific themes for consumer interest. In addition to these activities, ASF initiates programs, participates in seminars and colloquia, and collaborates with educational institutions and other public authorities to create and implement a national strategy to increase the level of financial education of the population.

In conclusion, we can support the affirmation that through the Consumer Protection Policy promoted by the Financial Supervisory Authority, all the activities carried out in order to exercise the regulatory, authorization, supervision and control duties, as well as those for petitions and financial education are subordinated to the fundamental objectives of consumer protection and the stability of supervised non-bank financial markets. Together, these components support a healthy development with long-term positive influences on the evolution of the non-bank financial market and the increase in the number of consumers of financial products and services provided by regulated entities operating in these markets.