Bosnia and Herzegovina: Protecting Consumers by Improving Legal Framework in Banking and Microfinance Sectors
The project is relatively large in size but at the same time is quite focused on consumer protection calibrated to the neediest financial sector market participants. It follows a World Bank diagnostic review of consumer protection and financial literacy and its dissemination through a public workshop in June 2010. An interesting objective of the project is that its outputs are expected to inform the next BiH World Bank Country Partnership Strategy (CPS), currently under preparation. Financial consumer protection is a relatively new area and thus has not been part of CPS inputs before, as such this FIRST-funded initiative will lead the way to including more consumer impact focused work in the World Bank CPS process. The project should allow for the CPS to build on objectives for access to finance and financial inclusion.
In addition, the project has also helped to inform the design of a World Bank post-FSAP Balkans TA Facility project. As such, the outputs are durable and sustainable. From the outset, the project has been designed to carefully address the risk of low political will of counterparts. Consequently, it required the creation of a multi-stakeholder steering group as a pre-condition. More FIRST projects going forward are expected to reflect similar, tangible advance commitments from recipients and relevant stakeholders as part of the project design. Such commitments are especially important in successful legal reform. There are continuing risks, nonetheless, because most of the legal reform outputs need to be approved by the Parliament. An important facet of the legal reform project, and one reason it appears to have been catalytic in BiH is that the reforms focused in large part on the legal framework and implementation of the structural changes in the relevant institutions. That is, the project targeted the requirements to build the necessary institutions for consumer protection, their powers and mandates, and legal protections. Securing an agreement to institutional arrangements for consumer protection in the banking and microfinance sectors is a key deliverable against which a performance indicator has been established in the project.