Information availability and financial services consumer education. Radovan Jelasic Governor of the National Bank of Serbia Belgrade, 9 November 2007

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1 Information availability and financial services consumer education Radovan Jelasic Governor of the National Bank of Serbia Belgrade, 9 November 2007

2 Growth in new foreign currency savings during the Savings Week equivalent to growth recorded in three months - EUR 310 million! Daily growth in new foreign currency savings during the Savings Week (in EUR million) Jan-30 Oct Oct 1-Nov 2-Nov 5-Nov 6-Nov 7-Nov Level of interest rates affects the volume of new savings; Households have substantial financial resources at their disposal;

3 Well-informed and educated financial services consumers represent a key prerequisite for efficient functioning of the financial market Clearly, information is critical to the effective functioning of markets. A core principle of economics is that markets are more competitive, and therefore more efficient, when accurate information is available to both consumers and suppliers If consumers are well informed, they are in a better position to make decisions that are in their best interest. Information helps and empowers individual consumers by improving their ability to compare products and choose those that will help them meet their personal goals, and this informed comparison shopping enhances competition. FED Governor, Randall Kroszner 11 October 2007

4 There is hardly any other central bank that has invested more efforts in financial services consumer education than the NBS (1/2) Opening the NBS museum in 12 Kralja Petra Street; Introducing consumer protection by the Insurance Law in 2004, and setting up Consumer Protection Division within the Insurance Supervision Department in 2005; Setting up a Call Centre on 31 October 2005 with a view to providing information regarding services offered by banks and other financial institutions; Application of the uniform method of calculation of interest rates (EIR) pursuant to the Law on Banks; Setting up a Mediation Centre in cooperation with the Belgrade Bar Association and Ministry of Justice with a view to enabling faster, cheaper and more efficient settlement of disputes (out-of-court settlement);

5 There is hardly any other central bank that has invested more efforts in financial services consumer education than the NBS (2/2) Setting up a Centre for Financial Services Consumer Protection and Market Supervision in 2006 with a view to furthering NBS communication and education activities; Distributing 8 leaflets on available financial services through daily press, and 18 brochures through other channels, including business units of 7 banks; Organizing seminars and presentations on corporate finance...

6 On Monday, 5 November, NBS museum welcomed its ten thousandth visitor Number of visitors in the NBS museum 10,000 10,000 visitors = 10,000 supporters of price stability; Organization of visits for representatives 890 1,766 1,837 3,503 2,603 of domestic and foreign institutions; visits by primary and secondary school students are on a constant rise. VII - XII 2005 I - VI 2006 VII - XII I - VI * NBS actively participates in cultural events such as : Night of Museums, European Heritage Days, Days of the Francophonie ; it also organized exhibition in Strasbourg during Serbia s chairmanship of the CoE Committee of Ministers Museum program is frequently changed and updated! * ending with 05 November 2007

7 So far, the NBS published 20 leaflets and 6 brochures on various topics (1/2) Over 2 million copies of brochures and leaflets on topics such as: How to exercise your rights Mediation What to pay attention to when borrowing Authorized current account overdraft Housing loans Variable interest rate Currency clause Payment cards Savings Financial leasing Your first private pension Insurance Insurance products Life insurance Voluntary health insurance Voluntary health insurance during stay abroad Property insurance Mandatory automobile liability insurance Voluntary full-coverage auto insurance Dinar - our money

8 So far, the NBS published 20 leaflets and 6 brochures on various topics (2/2) Banks also distributed 8 leaflets in around 100 thousand copies to their business units, while another 110 thousand copies were distributed by other financial institutions; NBS fully supports banks, such as ProCredit bank, which contribute to better education of the general public and finance their consumer education activities from own resources! Though many were doubtful about our consumer education activities, not a single complaint or comment has been received so far!

9 Call Centre has become a household name in Serbia! 25,000 23,000 20,000 18,300 15,000 10,000 5, , * The National Bank encouraged banks to set up their own call centres which around 85% of them eventually did; The National Bank s primary goal is to provide adequate information about financial services and to prevent potential consequences of the consumers lack of understanding of their terms of use! The NBS Call Centre is also a source of valuable information on the actual state of affairs in the market!

10 NBS consumer protection will develop along three lines Support Call Centre; Complaints; Mediation; Education NBS website; Media; Leaflets and brochures; Recommendations and guidelines; Support to internet portals; Transparency Reporting on received complaints by financial institutions Encouraging financial institutions to provide complete and timely information Reactive approach Proactive approach

11 On average, 34% of complaints is resolved in favour of bank clients in the first instance! 50% 40% 30% 20% 10% 36% Percentage of resolved complaints (by bank)* 48% 39% 32% 24% 21% 7% 34% Source of data: reports on client complaints submitted by banks to the NBS; NBS will regularly publish quarterly information on the percentage of granted 0% BI SG EFG EB KB UC AB complaints;!!! PLEASE NOTE: THIS INDICATOR SHOULD BY NO MEANS BE THE ONLY CRITERION WHEN OPTING FOR A BANK!!! *The analysis includes only banks which received at least 50 complaints throughout the quarter

12 Further steps in consumer education To strengthen the role of the Association of Serbian Banks with a view to promoting bank self-regulation and boosting fair and transparent competition; The NBS Financial Services Consumer Protection will start issuing guidelines and recommendations to financial institutions with a view to boosting transparency and fair relationship with the clients; To reinforce cooperation with independent organizations specializing in consumer protection and providing information on financial services: Financial web portals ( National associations for consumer protection in the country and abroad! An independent analysis of the quality of financial services in Serbia will be conducted in the course of 2008; The so-called white list of banks which apply the NBS middle exchange rate when granting loans and calculating installment schedules will soon be published on the NBS website;

13 Win by Saving - scheduled activities until the year-end NBS campaign aims to promote saving money among children under 18; Beginning from January, most diligent savers and best-saving schools will be awarded each month; Purchase of non-circulating coins collected by schools will soon be organized; Until end-2007, the Savings Caravan will tour schools in the four regional centres: Novi Sad, Kragujevac, Nis and Uzice Savings Olympics competitions will be accompanied by presentations and workshops on savings; Saving money will also be the central theme of a school theatre play, documentary film, comic and a computer game; From 5 November 2007 through 15 June 2008, Komercijalna banka is offering very attractive terms on children s savings in dinars incentive interest rate of 1.25% per month, with a bonus 20% interest on deposits withdrawn after 15 June 2008.