Once you have completed the Getting Started Questionnaire or a guided self-assessment, you will have a better understanding of your organization’s client protection strengths and the areas in which you can improve operations.

With this information in hand, you can use the Smart Campaign Tools and Resources Library to help implement the client protection principles within your organization. To get started, here are a number of suggested actions and resources. They are divided by corresponding Client Protection Principle and feature “Examples of Smart Practices” - practices in action at microfinance institutions around the world.

The Smart Campaign encourages contributions to this resource library.  To suggest or share tools or resources, please complete this form »

Client Protection Principles – Suggested Actions and Resources

• Avoidance of Over-indebtedness
• Transparent and Responsible Pricing
• Appropriate Collections Practices
• Ethical Staff Behavior
• Mechanisms for Redress of Grievances
• Privacy of Client Data

Avoidance of Over-indebtedness

Suggested Actions

1. Establish or revise a debt threshold for borrowers during capacity analysis
2. Use your local/national Credit Registry or Credit Bureau  (if one exists)
   i. Alternative – use a network facilitated sharing of client non-repayment history.
   ii. As a last result - keep careful records of your own client non-repayment history
3. Introduce flexibility into existing products, i.e. loan size, repayment schedule and loan term
4. Conduct regular internal audits of adherence to the established credit methodology

Examples of Smart Practices

• Debt Management Guide - National Credit Regulator, South Africa
  The National Credit Regulator (NCR) of South Africa publishes a debt management guide that is available to all South Africans, called Take Control of Your Finances. The guide provides basic information about how to identify over-indebtedness, tips on how to avoid and deal with over-indebtedness, consumers’ rights, how to access a debt counselor and tips on how to avoid and deal with money-scams, repossessions and surrenders (voluntary repossessions).
• Debt Counseling Pilot Project - Centre for Financial and Credit Counseling, Bosnia and Herzegovina
  Established in December 2009 and expected to be in full operation by March 2010, the Centre for Financial and Credit Counseling in Tuzla, Bosnia and Herzegovina is an innovative response to rising levels of delinquency in Bosnia and Herzegovina. The Center provides Bosnian citizens with financial education, and financial and credit advice. Services are free and include a national credit information helpline, one-on-one credit advice, and mediation services around debt-related legal and repayment issues.

Transparent and Responsible Pricing

Suggested Actions

1. Convene senior management to discuss the institution’s commitment to transparency and develop an action plan
2. Include interest rates, terms and conditions, costs and fees and any linked products in the disclosure to the customer prior to and at the point of sale
3. Convey this information in an way that is easy to understand, for example:
   i. Contracts in local languages
   ii. Read contracts to illiterate clients
   iii. Q & A review of contracts with clients
   iv. Pictographs
4. Always include a repayment schedule in the clients ‘take away’ materials
5. Ensure that clients receive receipts for all payments and accurate account balance information

Examples of Smart Practices

• Understanding Interest Rates - MicroFinance Transparency, USA
  MicroFinance Transparency offers a basic tool to help microfinance institutions understand the factors that influence the "effective interest rate" or the APR (Annual Percentage Rate) It also provides formulas used to calculate comparative costs of different loan products using a standardized approach. Microfinance institutions can use this tool to for calculating their own effective interest rates and thereby demonstrating transparent for the pricing of their loan products to anyone who asks.
• Customer Care - AMFIU, Uganda
  Association of Microfinance Institutions of Uganda (AMFIU) and its members believe the way people are treated is crucial to an organization’s institutionalization of transparency as well as performance, economic success and sustainability. Therefore, AMFIU supports activities that institutionalize client oriented transparency measures by using local music, dance and drama skits to explain their products.

• How to Talk to a Bank: A Brochure for Consumers - Procredit Bank, Serbia
  The fast growth of Serbia’s banking sector has flooded consumers with options for choosing banking services. This brochure explains to Serbian consumers how banking operations work and how to communicate with bankers. It provides information on the most important aspects of taking out a loan and on the importance of savings. Microfinance institutions can create brochures similar to Procredit’s to ensure that their clients know how to ask about the terms and conditions of the services that are being marketed to them. 

Appropriate Collections Practices

Suggested Actions

1. The Code of Ethics should include the institution’s position on acceptable and unacceptable collections practices
2. If the institution uses third-party debt-collectors, these agents should be trained on the institution’s values and held to the same standards as institution staff
3. Collections manuals should clearly outline acceptable debt –collection practices with step-by-step processes
4. Collections staff should receive specialized training in debt collections practices
5. Debt collections practices and procedures should be communicated to the borrower

Examples of Smart Practices

• Record Interactions - Caja Morelia Valladolid, Mexico
  Caja Morelia Valladolid decided to outsource its collections activities to a specialized firm in order to increase efficiency and effectiveness.  Although it does not require this firm’s employees to sign the Code of Ethics, Caja Morelia selected the specialized firm in part because of its system for quality control.  With more than 70 branches and 250,000 clients across five Mexican states, the credit union was looking for a company that would provide excellent results and also ensure that clients are protected from unacceptable collections practices. The specialized collections firm offered Caja Morelia the capability of recording every phone call made to Caja Morelia’s clients, making it possible for Caja Morelia to review the actual interactions the collections firm has with its clients.  If a client complains, Caja Morelia staff can access the sound file that demonstrates exactly how the collections specialists communicated with the client and use that information to follow up the compliant. 

• Best Practices in Collections Strategies - ACCION International, USA
  ACCION International explains the collections process it employs and draws on its experiences with collections programs throughout Latin America and with new collaborations in India.  In both continents the MFIs are primarily providing individual loans.  

Ethical Staff Behavior

Suggested Actions

1. Institutions should have a Code of Ethics (or similar document) approved by the Board of Directors and distributed to ALL staff. The Code should explain the institution’s values and standards for staff conduct, professional ethics and the like.
2. Include ethics in hiring practices, staff orientation and performance evaluation
3. Test staff on the Code and consider their periodic recertification
4. Conduct  regular internal audits to identify violations of operational procedures and test for fraud

Examples of Smart Practices

• Getting Started: How to Develop a Code of Ethics or Conduct
  This guide is intended to assist microfinance institutions in writing a Code of Ethics and/or Conduct.  Institutional ethics directly influence the image and reputation that employees, partners, customers and the community have of an institution. A Code of Ethics and/or Conduct is a useful tool to "transmit" the values, principles and vision of the mission and Institution.  In practice, Codes can also be used as a basis for staff re-testing or periodic recertification and provide a standard from which to measure success.

• Examples of Codes of Conduct
  A number of organizations have already adopted either client protection or ethics codes. The codes are generally an integral part of staff training and evaluation, and in many cases the codes are displayed in all branch offices.  In some cases they are also communicated to clients as part of the loan disbursal process.

Mechanisms for Redress of Grievances

Suggested Actions

1. Have a policy that requires customer complaints to be taken seriously and outlines the steps to their investigation and resolution
2. Consider implementing a call center, hotline, text message system for customer complaints
3. Staff receiving customer complaints should be trained to handle complaints, i.e. document calls and follow institutional process to resolve the issue
4. Flow chart – develop a process that outlines who is supposed to handle what and how complaints are elevated (e.g. step-by-step processes for time frame of resolution)
5. Use information from complaints to inform and improve products and services and prevent future complaints
6. If your country has a third-party agency to resolve customer complaints, share that information with your clients

Privacy of Client Data

Suggested Actions

1. Develop a policy on confidentiality and appropriate gathering and use of client information
2. Ensure that a secure IT system is in place with various levels of authorization to access info based on staffs rank/role
3. Require written customer consent for the use of their picture, story, name in marketing materials
4. If the institution uses innovative technology, i.e. ATM , mobile, it should offer educational sessions or materials to clients on how to safeguard their information

• Security is the Key: Guide to Financial Security - Finamerica, Colombia
  Finamerica provides a pocket-size brochure with tips about how to protect one's security and prevent identity theft, robberies and other possible threats to the privacy of their personal information.