Word of the Week – Client Protection Principles: Standards of appropriate treatment that clients should expect to receive when doing business with a microfinance institution, as agreed upon by the microfinance industry-wide effort called The Smart Campaign.
The Client Protection Principles include: 1. Avoidance of over-indebtedness; 2. Transparent and responsible pricing; 3. Appropriate collections practices; 4. Ethical staff behavior; 5. Mechanisms for redress of grievances; 6. Privacy of client data.
Spotlight Fact: The Client Protection Principles are evolving with the guidance of a Smart Campaign Task Force on “The Evolution of the Principles,” made up of microfinance industry leaders. One recent change added the words “and responsible” to the principle on transparent pricing to emphasize the need to keep pricing as affordable as possible consistent with institutional sustainability. The Task Force is working to broaden the principles so that they can be applied to the provision of all financial services, not only credit.
The Smart Campaign has gathered nearly 1,200 endorsers of the Client Protection Principles, representing 110 countries.
- Smart Microfinance and the Client Protection Principles – an introduction and explanation of the principles.
- Getting Started Questionnaire: Client Protection Self Assessment for Microfinance Institutions – a tool for MFIs that are interested in operationalizing the client protection principles.
- Smart Lending: Client Protection in the Lending Process – how and where the client protection principles can be applied in the credit process.
- Implementing the Client Protection Principles: Guide for Investors – a tool for investors interested in supporting the industry’s implementation of the client protection principles.