Central Bank unveils comprehensive financial consumer protection regulations

• Rules to be implemented in a phased manner over a period of 12 months 

Central Bank has introduced the Financial Consumer Protection Regulations, No. 01 of 2023, under Section 10 (c) of the Monetary Law Act, No.58 of 1949 to enhance the existing financial consumer protection frameworks.
These regulations were published in the Government Extraordinary Gazette No. 2344/17 on August 9, 2023. 

They are intended to be uniformly applied to all Financial Service Providers regulated by CBSL and are anticipated to enhance the existing financial consumer protection frameworks, specifically the Financial Consumer Protection directions issued under the Banking Act, the Finance Business Act, and the Finance Leasing Act.
Aligned with global standards, these regulations will lay the groundwork for Central Bank’s supervision of market conduct, fostering the development of a reliable and secure financial system in Sri Lanka, a Central Bank statement said.

“The regulations encompass a wide range of requirements and good practices designed to ensure that individuals and businesses dealing with financial products and services of regulated financial institutions are treated in a fair and transparent manner with improved service level enabling them to take well informed decisions on their finance activities with more confidence,” it said.
To remain up-to-date with emerging trends in digital financial services, customer data protection, and the specific needs of consumers, these regulations have integrated the latest developments in these areas, the Central Bank noted.

Furthermore, a structured internal complaint handling mechanism has been established, complemented by an alternative dispute resolution mechanism provided by the Central Bank.
A notable feature introduced by these regulations for the first time in Sri Lanka is the introduction of comprehensive customer protection supervision, known as Market Conduct Supervision. 

This extends a full range of regulatory and enforcement powers to the Central Bank and authorised officers. 
Central Bank said given the complexity of ensuring full compliance within a challenging environment, the phased implementation of these regulations will take place over a period of 12 months from the issue date, starting on August 9, 2023.