Ben Simmes, Smart Campaign Steering Committee member and Director of Social Performance and Financial Analysis at Oikocredit, spoke with the Smart Campaign recently about Oikocredit’s efforts to embed the Client Protection Principles into its institutional culture. He also shared his personal views on the importance of using credit responsibly…
The Smart Campaign: Why did you endorse the Smart 
Campaign, both as an individual and as an organization (Oikocredit)?
Ben Simmes: Client protection is a key prerequisite in any financial operation but definitely in microfinance, where we often deal with vulnerable people. They may be vulnerable due to a limited understanding of financial products and services that are offered, but more likely because they are poor and have little or no cushion to support them if they cannot meet their financial obligations.
Those providing funds, therefore, have an extremely important responsibility because there is a world of difference between credit and debt. Debt, one could say, is “credit that got out of hand.” While credit, as we want to use it, is an instrument for development.
In our economy, there is no development without credit. If credit is provided properly it leads to an increase in income-generating capacity; it enables the poor to break out of the vicious circle of poverty. If tailor-made to the needs of the clients, credit leads to empowerment. Credit is a stepping-stone out of poverty as long – and this is the crucial aspect – as long as repayment is possible. When repayment becomes an unbearable and insurmountable burden, it becomes debt.
I believe that the Client Protection Principles (CPPs) and the Campaign to promote them are crucial to safeguarding the microfinance industry and its clients. We should provide financial services that are needed, that can be repaid, and that are transparent and distributed by organisations and staff that are aware of their responsibilities and act accordingly.
TSC: What consumer protection-related accomplishments in your career are you most proud of?
BS: I’m proud to be part of an institution that that focuses on enabling poor people to build up and maintain their income-generating capacity and that has for many years pointed out the dangers of over-indebtedness.
TSC: As director of social performance and financial analysis at Oikocredit, can you tell us about some specific practices or initiatives related to client protection that Oikocredit has undertaken?
BS: Oikocredit endorsed the principles from the start. When the principles were developed, we took the initiative to incorporate them into all of our legal contracts. Gradually, the CPPs have become fully integrated into our organization. We have made them part of our due diligence for new loans and investment applications. Our staff has been trained about the principles and as a result, they make adherence to the principles part of their monitoring activities. We coordinated trainings about the principles with MFIs, the Smart Campaign, and the microfinance association in the Philippines and will do the same this year in India. Some of our staff members are being trained to become Smart Assessors and we are represented on the Campaign’s Steering Committee to further develop both the principles as well as the implementation of the principles on an industry level. Oikocredit has recently participated in a working group to develop similar principles for investors.
TSC: The microfinance industry now generally recognizes the importance of client protection. What major obstacles remain for organizations to dynamically and inclusively incorporate client protection into their business models?
BS: The major obstacle is that it will not be dealt with in a comprehensive way. From my perspective, the principles are a reflection of something much more fundamental, and that is the ethics of our work. The danger is that the principles are regarded as a checklist when they are really so much more.
The principles reflect that we are aware of our responsibilities, that we are sincere in our objective of supporting the millions of people who are denied access to financial services that are so important to their livelihoods. The principles should be fully integrated on all levels of the organization. Endorsing the principles is just the beginning. We need to be much more ambitious. Our ambition is not just “to do no harm” but to “do well”; to offer support that is really meaningful and leads to improvement of the lives of the people we aim to support.
TSC: What do you consider to be the biggest accomplishment the microfinance community could achieve in 2011 in the name of client protection?
BS: The biggest accomplishment for me would be to combine, in a professional way, our social and financial objectives. Achieving that combination has proven to be very difficult; most of the time, organizations excel in achieving their financial objectives or their social ones. We need to become experts in both, and in that way secure continuity of operations based on solid financial performance while offering and developing services that really matter for the poor.
