Consumer Protection-Certified Financial Institutions Now Serve More Than 20 Million Lower-Income Clients

> Posted by the Smart Campaign

Momentum for Smart Campaign Certification is accelerating. Today, we’re thrilled to announce that there are now more than 20 million lower-income clients whose financial service provider has been certified as meeting the Campaign’s standards for consumer protection.

Since February 2015, the number of clients served by Smart-Certified financial institutions (FIs) has grown by 6 million, to a total of 21 million, with the certification of an additional 11 institutions. To date, 39 FIs, from 19 countries across Latin America to Africa and Asia, have achieved Smart Certification, including some of the world’s best-known institutions dedicated to serving the poor.

As you might be familiar, the Smart Campaign’s Client Protection Certification Program contains a core set of standards against which institutions are evaluated by independent, third-party evaluators. Smart Certification publicly recognizes those institutions providing financial services to microentrepreneurs with a standard of care that upholds the microfinance industry’s seven Client Protection Principles. Customers of Smart-Certified organizations can be confident that their financial service provider has policies and processes in place to ensure that they are treated responsibly.

“Twenty million clients is an exciting milestone – recognition of the fact that there’s growing momentum in the industry for client protection,” said Isabelle Barrès, Smart Campaign director. “These organizations are not just paying lip service to the concept of fair treatment, but actually working hard to improve practices,” she added.

In April 2015, having listened carefully to evaluation results and industry feedback, we launched certification program revisions to streamline the process while maintaining high standards. These revisions included an appeals and complaints system and a process for renewing certification validity. At the end of 2015, the Campaign will introduce an accreditation system to license existing and new certifiers, and a version 2.0 of the certification standards. Certification 2.0 standards remove duplication and ambiguity, and deepen standards for savings, insurance, and digital financial services.

Even as the coverage of the certification program approaches critical mass, the broader Smart Campaign continues to advance. For the Campaign’s next phase we are excited about working on the following:

  1. Broadening to financial inclusion while remaining active in microfinance. As micro-insurance, savings, electronic payments, and other financial services targeted at the base of the pyramid gain traction, the imperative to extend client protection standards into these areas has become pressing. We have already begun to research client protection in digital financial services and micro-insurance and will incorporate some of the findings in the next round of certification standards.
  2. Heightened effort in standard-setting and certification. Our external evaluators told us that stakeholders see standard-setting as a core function of the Campaign. We will continue the standard-setting function, extending our efforts on this front to embrace new products and delivery channels. The Campaign will continue to conduct research to underpin standard-setting. Work on pricing and on appropriate product design and delivery is now underway.
  3. Greater emphasis on market-level activities. Findings from our client voice and default research highlight the importance of market-level forces in setting the rules and incentives around client protection practices. It is hard for individual providers to instill best practices if their competitors don’t. There are multiple opportunities to help shift the market context. Among other efforts, we are working with the two Indian Self-Regulatory Organizations (SROs), MFIN and Sa-Dhan, on improving membership grievance redressal mechanisms.
  4. Turn most FI-level support over to others, while maintaining tools, resources and trained consultants. The Campaign staff will reduce its direct engagement with FIs in the confidence that other organizations and specialists, including many trained by the Campaign, can continue to provide this support. The Campaign will continue to be a resource hub for this effort, through the tools and training library and a limited schedule of trainings of trainers and assessors.

For a more detailed update on Certification and the Smart Campaign, please see the recently published Smart Campaign Progress Report.

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