Consumer Protection and COVID-19: Borrower Risks as Economies Reopen
Credit, if managed responsibly, can help financial services providers (FSPs) and their lower income customers resume economic activity and rebuild livelihoods damaged by lockdowns and other measures brought on by the COVID-19 crisis. However, lockdowns have put consumers in financial need and providers under stress, setting the stage for consumer protection challenges to emerge around the provision of credit. In this Briefing, we offer preliminary recommendations for policy makers, regulators, and FSPs on how to keep borrower financial needs front and center without putting excessive stress on FSPs. These include suggestions on how to treat moratoria and other restructuring and how to provide new credit responsibly.
This Briefing takes a borrower and consumer protection perspective. It is based mainly on secondary sources, published survey information, and stakeholder interviews. Ongoing research in selected countries aims to further assess and document the issues presented here.