Page 91 - ITU-T Focus Group Digital Financial Services – Recommendations

ITU-T Focus Group Digital Financial Services
Recommendations

Title of recommendation Consumers should be informed of deposit insurance scheme coverage for
DFS

Working Group Consumer Experience and Protection
Theme Protection of Funds

Audience for recommendation Regulators

Regulators should require DFS providers to inform consumers whether mobile money and other digital stored-
value products are covered by the deposit insurance system or not and, if so, under what conditions (e.g. the
maximum amount covered per account or per customer). Public awareness initiatives should be carried out to
raise consumer understanding of the deposit insurance system and its role in protecting DFS customer funds.

Disclosure of key DFS terms and conditions is important to promote consumer confidence in DFS products
and consumer trust in DFS providers. This is especially true when the DFS product allows customers to digital
store-value in small amounts. If a deposit insurance system is already in place, consumers should be informed
on whether such digital stored-value product is covered by the deposit insurance system or not, before they
make a purchasing decision.
Whatever approach is adopted, public awareness programs is important to explain to consumers what digital
stored-value products are, whether they are covered by deposit insurance and, if so, under what conditions
they are covered (e.g. the maximum amount covered per account or per customer). These programs would
complement requirements on disclosure of information on deposit insurance for digital stored-value products,
preferably in standardized format and language. This information would be useful for consumers to access
through all relevant channels at the pre-selling stage (e.g. advertising, marketing, and informational materials;
consumer agreements; USSD menus). As the coverage level may be updated regularly, consumers would benefit
from easy access to check the coverage level during the life of the DFS product. In the Philippines, e-money
issuers disclose on their websites that these products are not covered by deposit insurance. In Colombia and
Mexico, where the direct approach is applied, disclosure on deposit insurance coverage is required.

The International Association of Deposit Insurers (IADI) has public awareness as one of its Core Principles for
Effective Deposit Insurance. IADI indicates that “…public awareness campaigns should adequately address
what types of deposits and money transfer vehicles are covered by deposit insurance and what types are not,
in order to minimize potential confusion among small-scale depositors and financial service providers alike.”
The Basel Committee on Banking Supervision in its latest financial inclusion guidance also recommends that
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a list of financial institutions be publicly available, indicating for each institution: “(i) the permitted activities;
(ii) the supervisory authority; and (iii) whether deposit insurance is available to the deposits placed with them
– and, if so, from whom. Each such institution should be required to disclose its status prominently – both at
branches and through agents or other third parties acting on its behalf.”

48 The Basel Committee on Banking Supervision, Guidance on the Application of the Core Principles for Effective Banking Supervision
to the Regulation and Supervision of Institutions Relevant to Financial Inclusion (2016) http:// www. bis. org/ bcbs/ publ/ d383. pdf

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