Certification Frequently Asked Questions (FAQs)

What is a Certification?

What does it mean to be certified for client protection?

Why is certification necessary?

How was the Certification Program developed?

What are the Certification standards & indicators?

What is meant by adequate standards of care?

Who is eligible for certification?

How does certification work?

What happens if an organization passes or fails certification?

What is Streamlined Certification?

How does a financial institution become certification-ready?

Who is licensed to conduct certifications?

How much will certification cost?

How will the certification information be used?

How often will the certification need to be done?

Will the Certification standards be revised?

What is the difference between an Assessment and a Certification?

How does the Certification Program define and measure Responsible Pricing?

Appeals and Complaints Systems

What is a Certification?

Certification is an independent, third-party evaluation to publicly recognize financial institutions that meet adequate standards of care in how they treat clients. Certification enables financial institutions to demonstrate adherence to the microfinance industry’s Client Protection Principles. Certification aspires to set a common standard for how client protection is measured industry-wide.

It is the verification that a company complies with a set of norms, at a given point in time. These norms are defined by standards-setting bodies (for example, the International Organization for Standardization, which defines all “ISO” standards). These bodies can either be regulators, or industry associations wishing to provide a tool for the self-regulation of their sector. The standards-setting body delivers licenses to certifiers that will check an entity’s level of compliance with standards. In microfinance, the Smart Campaign has so far played the role of a global standard-setting body in the area of Client Protection through gathering experts, proposing draft standards and collating comments from a wide range of stakeholders.

What does it mean to be certified for client protection?

A financial institution that is certified for the Client Protection Principles meets adequate standards of care to implement all of the Client Protection Principles throughout their operations, product offerings and treatment of clients. Those principles are:

  1. Appropriate product design and delivery
  2. Prevention of over-indebtedness
  3. Transparency
  4. Responsible pricing
  5. Fair and respectful treatment of clients, staff ethics, and non-discrimination
  6. Privacy of client data
  7. Mechanisms for complaints resolution

It is important to note that while certification for client protection indicates that financial institutions are acting responsibly to avoid harming clients, it cannot represent a “guarantee” because no institution can guarantee that all of its staff members are meeting intended standards 100 percent of the time. In addition, no certification process can observe 100 percent of an organization’s operations. Certification verifies systems and institutional practices, not every individual’s behavior. Thus, Certification means that the institution is taking adequate steps to ensure that violations of the principles are rare.

Why is certification necessary?

Certification is necessary to advance the microfinance industry’s commitment of keeping clients at the heart of its work.  Through incentivizing improved client protection practices and lowering the risk to clients, Certification will contribute to a more responsible and stable industry. 

The certification indicators can serve as a best practice document that clearly describes adequate standards in regards to client protection. It is expected that they will inform other stakeholders’ work, such as investors’ decisions about supporting organizations and regulators’ efforts to better understand and address client protection issues of microfinance service providers. A long-run vision is that certification might evolve into a tool that clients could use in selecting their providers.

How was the Certification Program developed?

The Certification program represents the output of several years of industry collaboration and input, managed by the Smart Campaign. Since June 2010 the Smart Campaign has been working with the microfinance industry through a Certification Task Force of over 30 experts representing various stakeholders including the four specialized microfinance rating agencies, to develop a Client Protection Certification Program . The Task Force recognized that it required significant commitment and attention to achieve adequate client protection performance. The fact that a financial institution has responsible practices should not be taken for granted, but rather celebrated as a true achievement.  The Task Force also realized that Certification of adherence also required some level of client validation through focus groups. As a result of the Task Force discussions, the Smart Campaign developed a Certification Proposal, which they opened to a period of public comment from October – February 2012.  The proposal contained a list of standards of client protection against which Certification would measure compliance, as well as a proposed methodology.  Following the period of public comment the Smart Campaign launched a year of Certification pilots within which the methodology and standards were tested and finalized in concert with the specialized microfinance rating agencies.  January 2013 represents the launch of the full program.

What are the Certification standards & indicators?

The Client Protection Certification Standards describe where the microfinance industry sets the bar in terms of client protection.  To be certified, a financial institution (FI) needs to comply with the indicators corresponding to the 30 adequate standards of care for client protection.  Each standard has one or more indicator by which to measure compliance, as well as guidance to the Certifier on measurement & context.

What is meant by adequate standards of care?

The Certification Program sets the bar at the basic, good practices that clients should expect when doing business with the financial institutions that serve them. Adequate standards of care are met when an institution has taken the necessary steps to ensure that their clients are protected through implementing appropriate policies and developing suitable products. They don’t serve as a guarantee of every individual or institution’s behavior. The standards are simultaneously meant to be achievable for most financial institutions with the desire to meet them.

Who is eligible for certification?

Retail financial institutions that provide services to the lower segments of the market and/or financially excluded populations are eligible for client protection certification. This includes institutions of any legal form: bank, finance company, NGO, credit union, etc.

How does certification work?

A financial institution (FI) will be evaluated through a streamlined desk review and on-site due diligence process that will include staff and client interviews and feedback. Financial institutions that wish to become certified must contact one of the licensed certifiers and apply. After applying, financial institutions will be asked to share key documents with the certification team. Fieldwork will be scheduled only if the financial institution has submitted all the required information and is responsive to the certifiers’ questions. If large gaps are identified during the desk review process, feedback will be given to the financial institution so that they can improve before the field visit is scheduled and improve their chances of meeting the standards for certification.

During the field review, the certification team will examine how the FI performs against the Certification client protection standards at three broad levels: a) market and regulatory context b) FI policies, procedures and systems, and c) organizational culture and how policies are reflected in staff behavior.  The Certification team will hold interviews with leadership, management, and key line staff.  The Certification team will also conduct several focus group discussions with the institutions clients. The field review typically takes four to five days.

Certification will be given to financial institutions that meet all of the 30 standards. Several weeks after the field mission, the Certifier will share their determination with the financial institution on whether the institution has passed or failed.  

Certifications can be carried out as stand-alone visits, or in conjunction with a Microfinance Institutional Rating or a social rating. The Campaign encourages combining Certifications with ratings: it will be more cost effective than seeking a rating and certification separately. Organizations passing all the required standards will be able to hold themselves out as certified and will be listed on the Smart Campaign website. Organizations not passing will be kept confidential, and, if desired, the Certification team will advise them on steps to improve their practices.

What happens if an organization passes or fails certification?

Results of the certification will be public for financial institutions that pass certification. Financial institutions that do not pass certification will share the results only at their discretion. This is in keeping with the intent of the certification program to incentivize improved practices.

Certified financial institutions will get a short report highlighting the key results of the certification and examples of how they have met adequate standards for client protection. They will have the right to use the ‘Client Protection Principles Certification’ logo. A brief version of the report will be available through the certifier’s website, and the name of the certified institution will appear on the Smart Campaign website.

During the certification visit, the certification body (CB) will determine whether the financial institution (FI) conforms to the client protection standards. In the case of non-conformities, there are three possible paths:

  1. Enter the Progress Phase. In this phase the FI will have a four month window to put in place corrective measures to meet the standards, using a certification report that identifies the deficiencies. Certification will be announced when these measures are complete.
  2. Streamlined Certification. If an FI passes the great majority of the indicators and, in the opinion of the certification body and the FI, has strong prospects to meet all the indicators within four months, it can receive certification soon after the mission. The FI will then have four months to comply fully. If this does not occur within the agreed time frame, certification will be withdrawn.
  3. Longer term corrective actions with new certification mission. Certification bodies may recommend to institutions with a large number of gaps, to opt-out of the progress phase and put into place longer term corrective actions.  In this case, they will be allowed to re-apply for a Certification mission with the same licensed certifier within any timeframe. If the institution that has not passed certification wishes to re-apply with another licensed certifier, they must wait approximately four months.

It is recommended that institutions that do not pass spend at least several months working on the identified gaps before re-applying.

What is Streamlined Certification?

To streamline the certification process, the Smart Campaign has introduced an option for any FI that passes the great majority of the indicators and, in the opinion of the certification body and the FI, has strong prospects to meet all the indicators within four months. The FI can receive its certification soon after the mission. The FI will then have four months to comply fully. If this does not occur within the agreed time frame, certification will be withdrawn.

How does a financial institution become certification-ready?

The standards  for certification are publicly available. The Smart Campaign recommends that any institution interested in certification conduct an internal review of their own practices against those standards. The Getting Started Questionnaire tool is a good starting point for this purpose. If an institution needs to upgrade its practices, it may wish to obtain an assessment from one of the trained assessors, participate in a training, or apply one of the Smart Campaign tools. In a few cases, MFIs may wish to seek technical assistance for specific upgrading projects. Certification is achievable for most institutions with time and effort but each will have its own timeline. The Smart Campaign recommends the steps illustrated in the figure below to determine the best course of action for an institution.

Who is licensed to conduct certifications?

The Smart Campaign has licensed specialized microfinance rating agencies, based on their contributions to the development of the certification process and their ability to meet standards for licensing. These ratings agencies were selected given their global experience evaluating MFIs, as well as client protection expertise. Over time, the Smart Campaign envisions licensing other organizations to conduct certifications, if they meet the licensing criteria.

How much will certification cost?

The exact cost of certification will vary by location and is a matter of negotiation between the licensed certifier and the requesting organization. While we acknowledge that price is always a concern, we anticipate that certification will be affordable and of positive value to financial institutions. Please see more detailed information about the terms and prices here.  

In order to reduce the cost for financial institutions, certification will be available not only as a stand-alone product, but can also be added as a module to an existing rating product such as a financial rating or a social rating. Because most of the groundwork required to assess a financial institution’s client protection practices is done during a rating, it will be substantially cheaper to obtain certification as an add-on module rather than as a stand-alone.

How will the certification information be used?

  • Financial institutions will use the certification results to market their organization as a pro-client institution to their investors, clients, funders, regulators and the general public.
  • They will also use the certification tool to pursue continued improvement in practices beyond the adequate standards to emerging high standards for each CPP.
  • Investors and donors will use the certification results to inform their investment and funding decisions. Some investors will require certification during a reasonable time prior to or after the investment.
  • Organizations monitoring and rating client protection and rating agencies will update their methodologies to reflect the standards defined for the certification program, providing a unified basis for how client protection is measured.
  • The Smart Campaign will communicate to the microfinance industry and beyond regarding certified organizations.

How often will the certification need to be done?

Originally set at two years, the revisions extend validity to four years, with a check-in after two.  At the two-year midpoint, certified institutions must undergo a renewal in order to retain their certification. The extent of the review at two years will depend on the scope of changes within the financial institution and changes in the Client Protection Certification standards. After four years, a full certification mission will be required.

What does a two-year certification renewal include?

Two-year renewal validates that an organization continues to adhere to the Client Protection Principles. The process will be a function of changes within a certified institution.  If a certified entity has changed extensively over the two years, the time and effort required for renewal will be greater than for one that has remained essentially the same.  Renewals include a desk review and a brief on-site mission, but do not include focus group discussions.   The process is designed to be a cost-effective, yet rigorous validation that the certified organization’s systems and procedures continue to adhere to the standards.

Will the Certification standards be revised?

In any industry, standards evolve. The Certification standards will be periodically reviewed and revised for precision and relevance.  Specifically for the next iteration, the Smart Campaign intends to expand the scope of the product offerings beyond the focus on credit to include more standards and accompanying indicators related to savings, insurance and payments. The standards will be revised through a consultative and transparent process involving representatives from the microfinance sector. The next iteration will take place in 2014.


What is the difference between an Assessment and a Certification?

Assessments are diagnostic tools for microfinance institutions to thoroughly examine their implementation of the Client Protection Principles in order to prepare for Certification. Self-assessments can be conducted internally using the “Getting Started Questionnaire,” or can be done by accredited, third-party assessors. These rigorous (and advisable) third-party assessments include an on-site visit and produce internal reports that are not shared publicly.

How does the Certification Program define and measure Responsible Pricing?

The fourth of the Client Protection Principles is “Responsible Pricing.”  It is defined as:
Pricing, terms and conditions will be set in a way that is affordable to clients while allowing for financial institutions to be sustainable. Providers will strive to provide positive real returns on deposits.

In operationalizing the fourth principle, the Smart Campaign has taken a practiced approach on measuring responsible pricing in the context of client protection. Given the complexity of price determinants, the variety in provider structure & product offerings as well as country contexts, it is impossible to draw fixed ceilings for responsible pricing that are applicable in practice. A market-based approach is more feasible because good data exists in most countries with regards to prices (especially where transparency is strong), allowing for apples-to-apples comparisons.  Within the Client Protection Certification Program there are three standards against which licensed Certifiers will judge compliance with the fourth Principle, the first being the most important: 

  1. The financial Institution offers market-based, non-discriminatory pricing

Market-based pricing incorporates two “market” elements – the first is that pricing is competitive for a given country-context and does not deviate significant from peers. If a provider’s pricing is substantially higher or lower than peers, responsible pricing implies that the provider should justify this difference to its clients and other stakeholders. Of course transparency is a pre-requisite for responsible pricing because it enables clients to understand and compare products and providers. The second market-based element is that pricing enables financial sustainability. Financial sustainability is a requirement for continuing to serve clients, rather than an end in itself and institutions should price their products in a way that allows them to cover their costs. Within the Certification Program, compliance with this standard requires an evaluation of providers’ major product offerings, from credit to savings to payments, as applicable. With credit for instance, a Certifier will analyze that loan prices do not deviate significantly from the average APR of peers, or average yield if average APR not available. Peer-groups are constructed around variables such as the target market and country.  To have non-discriminatory pricing means thatrates do not differ based on ethnicity, gender, disability, political affiliation, sexual orientation, and religion.

2. The financial institution’s efficiency is in line with its peers

A financial institution should achieve efficiencies that allow prices to be market-based and deliver reasonable value-for-money.  As mentioned in the first standard, pricing should cover costs but should also be as low as possible given the MFI’s operational costs.  Costs should not deviate significantly from peers and Certifiers will examine whether operational inefficiencies are being passed to clients through higher pricing.  Peer grouping according to loan size, funding costs and country context allows for relevant comparisons.  These are not the only drivers of  costs, but they were chosen because they are well-documented. Within the Certification Program, a provider’s operational efficiency (as measured by operating expenses/ average loan portfolio) is examined and compared to its peers.

3. The financial institution does not charge excessive fees

Fees can contribute to a lack of pricing transparency, both for calculating overall product cost and because some fees are contingent and may not be anticipated or even understood by the client. It is not appropriate to charge fees that are so high that they significantly harm the client, such as late payment fees that make repayment burdens unrealistically high or account maintenance fees that rapidly reduce client savings. When fees are necessary, the purpose should be to provide a reasonable coverage of the provider’s costs and to encourage appropriate behavior by the client. It costs money for financial institutions to open accounts, accept loan prepayments, pay insurance claims, and it is legitimate for providers to be compensated for those services. Fees can also help to encourage appropriate client behavior, such as late payment fees that encourage on-time principal and premium payments. In encouraging appropriate client behavior, however, it should be borne in mind that poor clients face a relatively high level of unpredictability in their lives. Therefore a fee structure that is costly for clients facing unexpected situations, such as one featuring high penalty changes, is to be avoided.  Within the Certification Program, the Certifier will examine all product fees/penalties including pre-payment, account closure fees, etc for appropriateness and affordability to clients.

Appeals and Complaints Systems

The Smart Campaign is committed to a credible and transparent Certification program that allows for appeals of certification or accreditation decisions and hears comments from the public about elements of the certification program or certified financial institutions,.

Appeals concern certification or accreditation decisions filed by applicants, and will be dealt with directly by the Smart Campaign.

Complaints concern comments regarding dissatisfaction with other aspects of the Smart accreditation and certification schemes, and should be directed in first instance to the appropriate actor (see below).

We encourage all stakeholders to use the Appeals and Complaints Systems to support the Smart Campaign in promoting the application of the Client Protection Principles (CPPs) so that the elements of the certification program will be as robust and responsive as possible.

Appeals

Appeal of certification decision:
The appeals process enables financial institutions to appeal certification decisions involving them. Appeals will be addressed by the Smart Campaign. Appeals are addressed by Smart Campaign when there is clear evidence that the relevant certification body violated Smart Campaign Standards or protocols.

Chart SM

If you wish to appeal to the Smart Campaign download and submit this form and evidence to This e-mail address is being protected from spambots. You need JavaScript enabled to view it Upon receipt you will be instructed on the next steps of the process. All appeals received by the Smart Campaign will be resolved within 90 days.

Appeal of an accreditation decision: (**COMING SOON**)

Complaints

The Smart Campaign’s Complaints System (CS) recognizes three levels of actors, each with corresponding system and procedures. Complaints will initially be handled by the agent closest to the complaint. If the complainant is not satisfied with the results, the complaint can then escalate to the next level for review.

For each formal complaint received, the Smart Campaign will:

  1. Review and decide on the validity of the complaint;
  2. Where appropriate, ensure that a complaint has already been handled by the agent closest to the complaint;
  3. Take appropriate actions and assess their effectiveness; d) Record all complaints and actions taken; and
  4. Respond to the complainant within 90 days.

If your complaint has reached the level of the Smart Campaign, download the attached form and send it to This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Complaints about Certified Financial Institutions

The Smart Campaign’s role in the Complaints System is not aimed at resolving individual disputes between individual clients and their financial institutions. Complaints of that nature will be redirected to the financial institution in question. The Smart Campaign will only consider well-substantiated complaints about the practices of certified institutions that have already been heard by the institution or certifier.

The Smart Campaign Complaints System (CS) follows the escalation matrix below for complaints related to certified financial institutions.

For a complaint about a Smart-Certified financial institution to be considered by the Smart Campaign, the complaint must:

  • First have been directed to the financial institution for action.
  • Should the complaint not be resolved to the satisfaction of the complainant, a complaint may then be lodged directly to the corresponding certifying body or, where ombud services are available, to the local ombud.
  • Should the complainant not be satisfied with the outcome of the second level investigation, a complaint may be filed directly with the Smart Campaign related to activities under the scope of the Client Protection Principles and certification standards.

Chart 1

Complaints against Accredited Certifiers (Certification Bodies)

For a complaint about a Smart-accredited certification bodies to be considered by the Smart Campaign, the complaint must:

  • First have been directed to the certifying body for action;
  • Be related to activities under the Smart Campaign Certification program and the criteria against which the CB has been accredited;
  • Should the complainant not be satisfied with the outcome of the complaint investigation as managed through the CB, a complaint may be filed directly with the Smart Campaign related to activities under the authority of the Smart Campaign.

Chart 2

Complaints about Smart Campaign Accreditation System or Certification Program

For general complaints or feedback about the Smart Campaign’s Certification Program or Accreditation system the first instance of contact will be the Smart Campaign.

Chart 3