> Posted by Saydra Battersby Quintanilla
Honduras has the basic institutional and legal building blocks needed to protect the client of microfinance. In recent years, institutional governance and consumer protection have risen in priority as microfinance institutions (MFIs) have become more prevalent and information becomes more accessible to microfinance clients.
Institutional Landscape. The two primary banks that support microfinance clients in Honduras are Banco Popular and Finsol, who along with all other Honduran microfinance providers, offered $222 million in loans to 161,447 active borrowers in 2012. The Central Bank of Honduras and the National Commission for Banks and Insurance Companies share responsibility for consumer protection by overseeing good governance, fairness, and protection, while Organización de Desarrollo Empresarial Femenino (ODEF), a Honduran NGO focused on improving socio-economic conditions of Honduran women and their families through technical assistance and capacity building. ODEF and other organizations such as credit bureaus have also focused on delivering stronger consumer protection practices in their businesses.
The CNSB released a revised Financial Consumer Protection Regulation No. 1631 and complimentary provisions in September 2011 to expand upon the existing obligations and conditions. The regulation introduces transparency through information disclosure at multiple stages of a transaction, and requires additional communication and verification that helps ensure that contract terms are clear and accurate so that clients can understand them. The law further requires institutions to promptly respond to consumer inquiries about their rights and obligations.
The Honduran Consumer Protection Act first enacted in 1989 serves to protect, defend, promote, publicize, and enforce the rights of consumers in general – not just financial services consumers. These protections extend to price gouging, misleading use of the terms “guarantee” and “warranty,” nondisclosure of risks, and lack of transparency, while also conforming to standard financial measures for easier comparison across products, and providing a mechanism for investigating complaints made by consumers.
For more information on client protection in Honduras, check out the newly posted Honduras profile in the Client Protection Library. There you can read more about the CNSB’s recent legislation and learn about the challenges the expansion of microfinance in Honduras has created for the nation’s consumer protection system.
Saydra Battersby Quintanilla is an Assistant Vice President at Credit Suisse. In her five years at the firm, she has worked in project management for the Finance division of the Investment Bank, and she now works in Regional Management providing support and oversight to the Canadian, Latin American, and Caribbean offices across all divisions (Asset Management, Investment Banking, and Private Banking). She is a member of the Credit Suisse Microfinance Advocates and serves on the Credit Suisse Sustainability Network Steering Committee.
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