Straight Talk on Client Protection – Standards of Professional Conduct

> Posted by Sergio Guzmán, Lead Specialist, The Smart Campaign, CFI

The Smart Campaign will soon launch its Certification Program on client protection for microfinance institutions (MFIs). In this fifth post in a series, Sergio Guzmán uses his experience from the field to shed light on standards that are often overlooked by MFI managers but that are a crucial part of client protection. 

A friend of mine has a very interesting saying that I’ve found myself repeating recently: “The common sense is the least common of senses.” I think this saying applies to microfinance organizations especially when it comes to setting adequate behavioral standards for staff, especially in collections. Most microfinance organizations assume good intentions in their staff. There is a good reason for this. MFIs have to deeply trust their loan officers. They are often the organization’s only connection to its clients.

Loan officers are one of the microfinance industry’s greatest assets, but also one of its biggest risks in terms of brand and reputational management. They have great power vis-à-vis the clients MFIs serve. This is why MFIs need to set standards of professional conduct that are expected of all staff and spell these out clearly in a Code of Conduct, Code of Ethics, or Staff Rules. My point goes double for standards regarding debt collection practices.

The Code of Ethics is supposed to inculcate staff with the organization’s values. In practice, I’ve often seen that Codes of Ethics voice only broad and non-specific behaviors: “Staff will treat all clients with respect and dignity.” Or “We expect all staff to be honest and transparent to clients.” Not to say that respect, dignity, honesty, and transparency are wrong, but MFIs should be better at framing these behaviors by articulating clearly to their staff what these mean, and especially what they do not mean.

For example, MFIs should explicitly prohibit the following behaviors: use of abusive language; use of physical force; limiting physical freedom of clients; shouting at the client; entering the client’s home uninvited; publicly humiliating the client; violating the client’s right to privacy; discriminating based on ethnicity, gender, sexual orientation, religious belief, political opinions, or disability; participation in corruption, kickbacks, or theft; and participation in sexual or moral harassment.

Maybe you think these things go without saying? And maybe they are embarrassing to mention?

Let’s be honest. These practices have happened in the microfinance industry in the past, and they will happen again – more often if organizations do not take a clear stand against them, backed up by procedures and monitoring. It is good to give loan officers some freedom to work, and we all know that salesmanship requires some improvisation and a lot of charisma. However, we must also frame sales and collections behavior within adequate standards. After all, our reputation as a client-focused industry depends on it.

Image Credit: World Vision Micro

Have you read?

Straight Talk on Client Protection – Mechanisms for Complaints Resolution

Straight Talk on Client Protection – Monitoring Client Indebtedness

Straight Talk on Client Protection – Hiding Fees When Quoting Interest Rates

Straight Talk on Client Protection – What’s Internal Audit Got to Do with It?