Having recognised the need to institutionalise financial consumer protection in the delivery of services by financial institutions regulated by the Central Bank of Sri Lanka (CBSL), the Financial Consumer Relations Department (FCRD) of the CBSL has developed a comprehensive set of new regulations aiming at introducing an integrated financial consumer protection framework for entities regulated by the CBSL and is now inviting feedback for them. 

The Central Bank, issuing a statement, noted that these regulations are expected to define specific regulatory powers for the supervisors to facilitate market conduct supervision while providing clarity to both the service providers and recipients on the areas to be considered in delivering/obtaining financial services aiming at minimising the need for financial consumers to make subsequent complaints.

“In order to have wider stakeholder consultation, the FCRD has invited the relevant industry associations and the general public to submit their observations, comments, and suggestions on the draft regulations.”

These regulations are being issued to protect consumers, as more and more financial institutions have failed since 2015. Former CBSL Governor Ajith Nivard Cabraal informed Parliament in 2021 that 256,306 customers had deposited money totalling Rs. 61.79 billion between 2015 and August 2020, in six failed finance companies.

These companies are Central Investment and Finance Ltd. (previously Central Investment and Finance PLC), Standard Credit Finance Ltd., TKS Finance Ltd., The Finance Company PLC, ETI Finance Ltd., and Swarnamahal Financial Services PLC.

The proposed regulations will also prohibit “unfair business practices”, which will prevent unsolicited loan offers, abusive debt recovery practices, requiring payment of un-accrued (future) interest/early settlement fees on credit facilities exceeding the levels permitted by the CBSL, automatic increase of credit limits without prior consent by the consumer, and charging maintenance fees on dormant accounts.