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Empower Consumers of Financial Products and Services through Improved Financial Literacy/Capability and Effective Consumer Protection Systems.
Hosted by G20 Russia, World Bank, OECD13-14 June 2013, Moscow
Financial Education and Consumer Protection Strategies: Complementary Foundations for Effective and Responsible Financial Inclusion
The Brazilian Case
Marusa Vasconcelos Freire Deputy Head, Financial Education Department
1. General overview (context)
2. Integrated approach to empower financial consumers
2.1. National Partnership for Financial Inclusion
2.2. National System for Consumer Protection
2.3. Financial Education National Strategy (ENEF)
2.4. Financial Education Department (Depef)
Agenda
• Brazil is among the largest countries in terms of territory, population and GDP
• Brazil has vast natural resources, including recently discovered large offshore oil fields, a diverse industrial base, a dynamic and sophisticated private sector, and a well-structured public sector
• Brazil is a vigorous democracy, with free multiparty elections and a stable political system
• Brazil has good relations with all its neighbors and has increased its ties with all regions of the world
Sources: IBGE / BCB / IMF
Brazil DemographicsGeneral Overview
• 7th largest GDP: US$ 2,253 billion (2012)
• Continental country: 5th largest area 8,515,767 km2
• 5th largest population: 195 million people (2011)
• Sources: IBGE / UN
Sources: IBGE / UN
DemographicsGeneral Overview
Dependency RatioPopulation Pyramid (2011)
Note: The dependency ratio is the ratio of the sum of the population aged 0-14 and that aged 65+ to the population aged 15-64
• Brazil’s dependency ratio is still declining, while other countries already face an upward trend
• Brazil’s population is highly concentrated within the Economically Active Population range
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
25
50
75
100
Brazil ChinaIndia Russia
millions of people
men women
0-4
10-14
20-24
30-34
40-44
50-54
60-64
70-74
80+
-10 -5 0 5 10
5Sources: BCB / IBGE
Financial Inclusion - AcessibilityGeographic Coverage Increased
2000 2010
0 (20%)
>0 to 2 (22%)
>2 to 5 (40%)
>5 to 10 (16%)
>10 (2%)
# of points per 10,000 adults (% of municipalities)
0 (0%)
>0 to 2 (0%)
>2 to 5 (6%)
>5 to 10 (29%)
>10 (65%)
# of points per 10,000 adults (% of municipalities)
82% of municipalities had less than 5 points of attendance per 10,000 adults in 2000.
In 2010, 94% were above this level.
Bank branches, bank advanced outposts (PAA), credit cooperatives (headquarters and outposts) and correspondents
General Overview
6
• It seems that financial inclusion moves in a faster pace than functional literacy:- 1 in each 5 adult Brazilians is functional illiterate (PNAD 2009);- ¾ of Brazilians do not understand a bank contract (INAF);
• Effective and responsible financial inclusion needs to address appropriate actions to change this reality and to help to avoid serious indebtedness problems
– Financial stability – Quality of life of families
=> Promote the financial system efficiency and the financial inclusion of the population (Strategic Goal of BCB - 2010)
Promover a melhoria da qualidade da prestação de serviços financeiros em prol do equilíbrio na relação cidadão-instituição financeira
Relevance of Financial Education and Consumer Protection Strategies for Effective and Responsible Financial Inclusion
General Overview
7
1. Improve the regulatory framework for microcredit and IMFs
2. Promote the diversification and improvement of financial services
3. Define a legal and regulatory framework for mobile payment
4. strengthen the network of distribution channels
5. Contribute to promoting financial literacy
6. Scale up efforts to ensure that financial service users are aware of their rights and dispute resolution procedures
7. Improve the methodology used to measure financial inclusion and incorporate quality indicators
8. Conduct surveys on Brazilian people’s behavior and perception in relation to the use of financial services
National Partnership for Financial InclusionIntegrated Approach
8
• Law 8078, of 1990 (Consumer Protection Code)
- Competence is concurrent among the Federal, State and Municipal governments regarding consumer rights, and there is, therefore, no hierarchical relation between them– National Secretariat for Consumer Protection (SENACON) of the Ministry of
Justice (coordinate policy and actions)– Other public bodies of Federal, State, Federal District and Municipal governments– Consumer defense civil entities
• 2006 – Supreme Court Decision (ADIN 2.591-1)
- Financial institutions are subjected to the Consumer Defense Code
• Decree 7.963, of 2013 (National Plan for Consumption and Citizenship)
- Integration and coordination of policies, programs and actions.- Committee of Consumption and Regulation
National System for Consumer ProtectionIntegrated Approach
9
• Decree 7.397, of 2010 - To empower consumers, policies on financial education, financial
inclusion, and consumer protection (such policies are synergistic and complementary to each other)
• National Committee for Financial Education - CONEF – Deputy-Governor of the Central Bank– President of the Securities and Exchange Commission of Brazil (CVM)– Superintendent-Director of Brazil’s National Superintendence for Pension Funds (PREVIC)– Superintendent of Brazil’s Superintendence of Private Insurance (SUSEP)– Executive-secretary of the Ministry of Education (MEC)– Executive-secretary of the Ministry of Finance (MF)– Executive-secretary of the Ministry of Social Security (MPAS)– Executive-secretary of the Ministry of Justice (MJ)– Four representatives of civil society: ANBIMA, BM&FBOVESPA, FEBRABAN, and CNSEG
• CONEF’s Executive Secretariat => Banco Central do Brasil
National Strategy for Financial Education - ENEFIntegrated Approach
10
• To promote and foster a culture of financial education in the country.
• To broaden the understanding of citizens in order to make informed choices regarding the management of their resources.
• To contribute to the efficiency and soundness of financial, capital, insurance, and pension funds markets.
ENEF’s ObjectivesIntegrated Approach
11
• ENEF is a permanent and nationwide policy
• Attendance to ENEF’s actions shall be free of charge for target audiences
• Public interest must prevail in all actions
• Programs, projects, and actions employ the information-formation-orientation approach
• ENEF’s management is centralized, actions are decentralized
• ENEF’s plans and actions shall be periodically and permanently evaluated and revised
• Partnerships with public and private institutions are fostered
ENEF’s PrinciplesIntegrated Approach
12
• ENEF has a centralized coordination and decentralized execution.
- Brazil’s large territorial extension and cultural diversity, with custom and linguistic differences across the Country, require establishing partnerships both nationwide and with local collaborators, who are familiar with the peculiarities of each community.
- Such structure also conciliates the need for integrating government and non-government entities, preserving the autonomy of financial system regulators, as well as that of other participants, to develop their own educational programmes.
- Rather than a top-down public policy, ENEF’s governance is closer to a network configuration.
ENEF’s GovernanceIntegrated Approach
13
Driven by the growing importance of financial education, financial inclusion, and consumer relations in the national agenda, in 2012, BCB created a new Department to handle these issues based on integrated approach:
- To promote financial education and financial inclusion- To evaluate the impact and efficacy of BCB’ regulation & actions with focus
on the citizen.- To act as Executive-Secretariat for CONEF
• Challenge - Strategies to enable “scalability” of ENEF to reach millions of people
• How to face this challenge? - Using an integrated approach to empower financial consumers
(strategic partnerships and special projects)
Promover a melhoria da qualidade da prestação de serviços financeiros em prol do equilíbrio na relação cidadão-instituição financeira
Department of Financial Education (BCB)Integrated Approach
Thank you!
Marusa Vasconcelos Freire
Deputy Head, Financial Education Department
Promover a melhoria da qualidade da prestação de serviços financeiros em prol do equilíbrio na relação cidadão-instituição financeira