IFRS Foundation

Consumer Finance

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Current language: English
The Consumer Finance industry provides loans to consumers. The largest segment of the industry is comprised of revolving credit loans through credit card products. Additional loan services include auto, micro lending, and student loans. Some entities in the industry also provide consumer-to-consumer money transfers, money orders, prepaid debit cards, and bill payment services. Industry performance is determined by consumer spending, rates of unemployment, per capita GDP, income, and population growth. Recent shifts toward consumer protection and transparency have aligned and will continue to align the interests of society with those of long-term investors. Entities that effectively manage their social capital will therefore be better positioned to maximise their financial capital.

Relevant Issues (3 of 26)

Why are some issues greyed out? The SASB Standards vary by industry based on the different sustainability-related risks and opportunities within an industry. The issues in grey were not identified during the standard-setting process as the most likely to be useful to investors, so they are not included in the Standard. Over time, as the ISSB continues to receive market feedback, some issues may be added or removed from the Standard. Each company determines which sustainability-related risks and opportunities are relevant to its business. The Standard is designed for the typical company in an industry, but individual companies may choose to report on different sustainability-related risks and opportunities based on their unique business model.

Disclosure Topics

What is the relationship between General Issue Category and Disclosure Topics? The General Issue Category is an industry-agnostic version of the Disclosure Topics that appear in each SASB Standard. Disclosure topics represent the industry-specific impacts of General Issue Categories. The industry-specific Disclosure Topics ensure each SASB Standard is tailored to the industry, while the General Issue Categories enable comparability across industries. For example, Health & Nutrition is a disclosure topic in the Non-Alcoholic Beverages industry, representing an industry-specific measure of the general issue of Customer Welfare. The issue of Customer Welfare, however, manifests as the Counterfeit Drugs disclosure topic in the Biotechnology & Pharmaceuticals industry.
General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for: Consumer Finance

Customer Privacy
  • Customer Privacy

    Consumer finance entities face risks and opportunities associated with their internal use of data supplied by customers for activities that are not the primary purpose for which the data were collected (for example, for use in targeted advertising and/or transfer to third parties). Ensuring the privacy of personally identifiable information (PII) and other data of account holders is an essential responsibility of entities in the Consumer Finance industry. To assess performance on this issue, investors would benefit from disclosure from entities on the number of account holders whose information is used for secondary purposes, and their policies and procedures around using such information, including the nature of their opt-in policies. Combined with information on legal or regulatory actions taken against the entities that are related to customer protection and privacy, such disclosure would be decision-useful to investors. Consumer finance entities that fail to manage performance in this area are susceptible to decreased revenues as a result of lost consumer confidence and churn, as well as to financial impacts stemming from legal exposures.
Data Security
  • Data Security

    Entities in the Consumer Finance industry face risks and opportunities associated with how they manage the safety of data supplied to them by customers, in the context of external threats. Ensuring the security of customers’ PII is an essential responsibility of entities in the Consumer Finance industry. To assess performance on this issue, analysts would benefit from disclosure on efforts related to safeguarding data against emerging and continuously evolving cybersecurity threats and technologies, actual security breaches compromising customers’ personally identifiable information (PII), and credit and debit card fraud. Entities that fail to manage performance in this area are susceptible to decreased revenues as a result of decreased consumer confidence and churn. Furthermore, instances of data breaches may expose entities to costly and lengthy litigations and potential monetary losses.
Selling Practices & Product Labeling
  • Selling Practices

    There are three key elements within the Selling Practices topic, performance of which can materially impact entity operations and financial condition. First, entity policies related to the structure of compensation and/or other incentives may unintentionally create the risk of selling products and services that are not in the best interest of clients. Secondly, a failure to provide transparent information to customers about primary and add-on products can increase the risk of being charged with using deceptive practices. And finally, depending on the characteristics of the portfolio of products sold, poor performance on the first two elements could result in a high concentration of risky products held by customers. Consumer finance entities are likely to continue to face increased scrutiny in the wake of high-profile incidents as regulators attempt to ensure transparency and enhanced disclosure. The disclosure of key characteristics of a lending portfolio, including average fees from add-on products, average age of accounts, average APR, average number of trade lines, and average annual fees for pre-paid transaction products will allow shareholders to determine which consumer finance entities are better positioned to protect long-term value rather than relying on short-term revenue generation practices. Ability to provide consumer finance products that are in the best interest of customers can help entities in the industry not only minimise risk exposure in the existent portfolio of products, but also build trust with new and existent customers, and expand their market share ensuring sustainable revenue growth.

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Current Industry: Consumer Finance

Consumer Goods
Extractives & Minerals Processing
Food & Beverage
Health Care
Renewable Resources & Alternative Energy
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