The Financial Consumer Protection Act 2022 |28 March 2022
New Act to protect interests of financial consumers
The National Assembly recently approved the Financial Consumer Protection Act, 2022 which seeks to protect the interests of the financial consumers to fairly, reasonably and effectively handle financial consumer disputes and to promote the development of financial sector.
Financial consumer protection encompasses the laws, regulations, and institutional arrangements that safeguard consumers in the financial marketplace.
The newly approved Act also provides for regulation by the competent authorities, role of the competent authorities, fees, compliance with the provisions of the Act, reporting duties of the financial services providers, information to the competent authorities, examination, records to be maintained by the financial service provider, enforcement action by the competent authorities, right to submit written representation and oral submissions and publication by the competent authorities, while it also provides for the duties of the financial services providers, their general obligation, and transparency and advertising matters.
It also caters for abusive practices such as prohibited acts and conducts, abusive collection and debt recovery practices, default interest, exercise of rights against the principal debtor and guarantor and bundling and tying of products, and also for protection of consumer data and confidentiality of non-public consumer data, collection of non-public consumer data, storage of non-public consumer data and disclosure of non-public consumer data, while internal policies and procedures relating to sale of services or products and sales personnel remuneration policy are also absorbed within the Act.
Financial consumer disputes, internal complaint handling unit, complaint handling mechanism by the competent authority, confidentiality during the proceedings, remedies and compliance with the competent authority's decision also fall under the Act which furthermore provides for damages which includes liability for damages and punitive damages.
According to Senior Market Conduct Analyst at the Central Bank of Seychelles (CBS), Beggita Vital, the Act grants the competent authorities – the CBS and the Financial Services Authority (FSA) – explicit mandate for financial consumer protection, while it also enhances reporting requirements of Financial Services Providers in relation to consumer protection and market conduct supervision.
She explained that the Act also grants the competent authorities powers to take disciplinary action and impose penalties for financial consumer protection matters as well as remedies for consumers and also promotes cooperation between the competent authorities, the Fair Trading Commission (FTC) and other relevant authorities.
It also sets standards for contractual arrangements, prohibits abusive practices, enhances the complaint handling process, and also provides a mechanism for the award of direct damages.
Ms Vital however made it very clear that the Act does not control interest rates, does not force FSPs to grant financial services – such as loans –, and does set premium rates.
Roland Duval