Combining financial education and consumer

protection to promote financial inclusion:

global challenges and country practices

Thailand’s Experience

Securities and Exchange Commission of Thailand

16 December 2014

Tipsuda Thavaramara

Deputy Secretary-General

Overview: Challenges in Thailand

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0

1

2

3

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฿-

฿5,000

฿10,000

฿15,000

฿20,000

฿25,000

2000 2002 2004 2006 2007 2009

Household Income, Expenditure, and Debt to income ratio

Income Expenditure

Debt to income ratio

Year

Debt/Income

1) High household debt

Source: NSO

VS.have access to

have access to capital market

80%8.2%6 times more than income

2) Low access to capital market

formal financial institutions, mostly BANKS.

3) Passive participation

32% of all 1.04 million trading accounts

are ACTIVE

Thai investors prefer buy-and-hold &deposit-like products

Source: BOT

Source: SEC Thailand

Source: SET

FOCUS TODAYReasons behind

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Providing access: proactive approach

Mobile Application & Website: Start-to-Invest

Source: NBTC, ICT

149.6 % Mobile penetration,

HALF of mobile users

use smartphones

Potential 52 million internet users

Spending 50 hours a week

on the internet

Why sole DISCLOSURE would not work?

Investors

Can people choose?

2) Don’t read

1)Don’t know

Fact sheet

Just signJu

nk

3) Don’t care

3

Sellers

4) Don’t really

understand

At the same time,

product innovation brings new risks.

Wide income gap between the rich and the poor

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Can people choose?

Why can’t we rely too much on RESTRICTION?

Cars

House

Financial Freedom

Kids

People need some risky products to generate growth

People should have

“Freedom of Choice”

& to reduce inequality

foreign equities high yield bonds

securitized products

REITs

ETFs

mutual funds

GMS-linked products

BUT must clearly understandrisks & accept consequences of their choices

Thailand is

currently ranked in unequal

distribution of wealth in the world.

6th

Source: Credit Suisse Global Wealth Report

Education is a tool

Before Current

what questions to ask

what they need to know

To inform investors:

key product specific risks

XSignature __________

WRONG ANSWER? Read the solution to learn more

Acknowledge specific risk 5

Investors

BUT!Notat theright

time mediumchannellanguage

InvestorsFinancial Services

By the time investors need

to make decisions

???

Example: Risk Warning for BASEL III Securities

I understand the characteristics, specific risks, and return related to Basel III securities. More specifically, I clearly understand that:

1. Basel III securities are riskier than general bonds.

2. Basel III securities do not have a liquid secondary market. Furthermore, the Bank of Thailand does not allow issuing bank to buy back the Basel III securities. Therefore, I acknowledge the difficulties of redeeming and reselling the product.

3. Issuing bank can impose special terms, such as restrictions on principle and interest payments. Since this is not considered as a default by the issuing bank, I will not have the right to take legal actions against the issuing bank.

4. I may be forced to convert my Basel III securities to equity at the price that may be higher than current market price, when issuing bank face financial difficulties.

5. I may lose all my investment and return in Basel III securities if the Bank of Thailand intervenes to rectify issuing bank’s financial difficulties

Signature ________________________

(investor)

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Going forward

Focus on

Behaviors & Biases

of investors

Sharpen our tools that equipped investors to make well-informed decision

Right amount of investor protection without hindering

freedom of choices & economic growth

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GOAL