The Alternative Financial Services Association of North Macedonia
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Financial literacy is an essential element for any country and its development

A well-developed, secure and stable financial sector that can meet the needs of financial services users is important for any country and its development. A wide range of financial products is of interest not only to investors but also to each individual customer. In a market economy, every individual takes care of his or her own domestic budget and makes independent investment and borrowing decisions, taking risks. By providing information and improving the understanding of financial services, financial service users develop risk awareness and acquire those risk management skills. However, in order to make an appropriate decision, it is necessary for them to have complete and understandable information on the basis of which they can make comparisons of the products they meet on the market. Additional knowledge gives them the opportunity to choose the appropriate service. That is why financial literacy is an essential need of every family who needs to find a way to properly manage their home budget, meets their subsistence needs, meets their obligations, buy a home, saves money on children’s education, to provide funds for old age …

With the development of the global financial market and the development of increasingly complex financial products, consumers have come to realize numerous innovations in the financial markets. Today, they are faced with many different credit instruments, as well as different types of savings offered by banking and non-bank financial institutions (financial companies, insurance companies, pension funds, investment funds …) for which they do not have or do not have enough. knowledge.

Research conducted for OECD financial literacy needs has revealed a low level of knowledge of financial products in many countries, including in developed countries. Thus, 71% of respondents in Japan have no knowledge of investing in bonds. In Australia, 67% of respondents said they understood the concept of interest rate, but only 28% knew the correct problem-solving answer using that concept. The growing number of credit card users in OECD countries has led to an increase in personal bankruptcy – one in 10 families in the US has experienced personal bankruptcy, and in Austria, this number has increased by 11%.

For these reasons, the OECD Directorate for Financial and Business Affairs issued three recommendations designed to encourage both OECD and non-OECD member countries to provide financial education for all social spheres, starting with primary school.

Financial education is a function that is complementary to the function of consumer protection, and the overlap between these two functions is obvious. Their common role is to provide information on financial products. Consumer protection means regulating, prescribing minimum standards for the performance of financial institutions and setting conditions for disclosure of information about financial products offered by these financial institutions. The function of consumer protection is to provide regulatory conditions in which financial institutions operate in a transparent manner and in accordance with good business practices. The fair and professional attitude of financial institutions towards financial service users contributes to strengthening customer liaison with those institutions, enhancing confidence, enhancing healthy competition and developing the financial sector. This is important in a situation where new, more complex products and market players are constantly emerging, especially in the non-banking sector.

In North Macedonia, financial companies, as representatives of the non-banking financial sector, represent an industry that has been growing at an accelerating pace in recent years, becoming a real complement to the lending activity of traditional financial institutions and confirming that the population needed such services.

Part of the financial companies formed the Association of Financial Companies (AFD) whose main purpose is to promote safe, socially responsible and sustainable lending practices and to introduce quality standards for services, while at the same time educating the population on the financial services they are part of. offered by financial companies. To that end, for example, Tigo Financials, which is a member of the Association, is currently running a media campaign “Tigo Financial Dictionary” that introduces the population to the basic financial terms – interest, loans, Hinterk and more. Educational content in the form of dictionaries, news, steps and video content for simpler and proper use of financial services and education are also available on the pages of M-Cash, Iute Credit, Credisimo, Mogo, Digital Finance and CN Finance.

The members of the Association also signed a Code of Good Practice for the protection of consumers, providing additional measures for consumer protection. In its content, it clearly defines the obligations and rights of both non-banking companies and creditors. But more importantly, it guarantees additional protection for the interests of consumers who have received or expect to receive service from Association members.

The Code applies responsible borrowing by clients, and companies evaluate their financial conditions and ability to meet their obligations. The members provide their clients with the necessary information on the nature of the loans and at the same time are committed to educating the population about what these products are actually intended for, including the fact that the loans are not advisable for resolving pre-existing financial difficulties.

The Code of Good Practice at the same time provides assurance to the credit beneficiaries of one of the members of the Association that the business practices set forth in this document will be respected and any activity contrary to the prescribed code will be sanctioned. Clients, if they have complaints about the services, can also submit a complaint to the Association of Financial Companies, which will be processed within 5 days, and if necessary, further investigation will be initiated.

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