Customer protection principles and missions of the ACPR
Article L. 612-1 of the French Monetary and Financial Code gives the ACPR the task of ensuring “the stability of the financial system and the protection of customers, policyholders, members and beneficiaries of the persons under its supervision”, ensuring compliance by these same persons “with the rules designed to ensure customer protection” as well as “the adequacy of the means and procedures that they implemented to this end”.
What is customer protection about?
Customers are often less knowledgeable about banking or insurance products than professionals. This phenomenon is called “information asymmetry”. As a result, customers may not always be able to assess the benefits, drawbacks and risks associated with a given product accurately. This can lead to a drift towards questionable business practices, to the detriment of the customers.
Reducing this information asymmetry is both the purpose of customer protection regulations and the duty of professionals involved, so that each customer can be offered products suited to his or her needs and expectations, and make informed purchase or subscription decisions. This principle plays a crucial role in maintaining the public’s confidence in the financial sector.
The ACPR has a duty to promote fair business practices and behaviour among professionals, taking into account the customers’ interests, limiting the risks they are exposed to and preventing conflicts of interest from adversely affecting them.
A few core principles in terms of good business practices and customer protection have been identified:
- The first one is to ensure that customers are properly informed and that the explanations given to them are fair, including information on costs and risks. This includes paying attention to the training of sales staff, both in terms of products and customer protection rules.
- The second one is that managing the compliance risk of professionals is not the only issue at stake, as it is equally important for the interests of customers to be properly taken into account in all circumstances. From this perspective, the corporate culture promoted by managers, product governance and oversight, and the policy in place to prevent conflicts of interest all play a crucial role.
Customer protection and good business practices must be taken into account throughout the entire business process: from the design of products and sales tools -including digital interfaces- to partnership choices, marketing practices, contract execution and complaint handling.
ACPR missions regarding customer protection:
The ACPR monitors...
...market practices: advertising, products and services, marketing methods, etc. This monitoring draws on information collected from the public and industry professionals within the framework of reporting requirements these professionals are bound by (find more information) as well as on their thematic survey responses. This monitoring process also incorporates information exchanged pursuant to cooperation practices and agreements with other national or international institutions (find more information). This monitoring and analysis activity helps the ACPR identify and anticipate trends and risks in the market and define its supervisory priorities.
The ACPR conducts on-site as well as off-site inspections...
...of the business practices of banking and insurance institutions, as well as their respective intermediaries and crowdfunding intermediaries. Whenever it appears necessary in the light of its findings, the ACPR asks professionals to correct deficiencies identified in their practices (find more information).
The ACPR guides...
...market practices, through its supervisory activities and communication. When it identifies widespread issues, the ACPR may publish good practice recommendations for professionals or press releases for the attention of all.
Updated on: 05/23/2023 11:16