MICROCAPITAL STORY: Center for Financial Inclusion at ACCION International Holds First Meeting of the Steering Committee for the Campaign for Client Protection in Microfinance; International Leaders Endorse the Six Principles of Client Protection in the Meeting

In the face of client protection failures in the mainstream financial sector, the first meeting of the Steering Committee for the Campaign for Client Protection in Microfinance was hosted by the Center for Financial Inclusion at ACCION International. The meeting was attended by members of the committee which comprises of twenty-three leaders from various microfinance organizations representing a diversity of regions, types of institutions and expertise. The purpose of the meeting was aimed at ensuring microfinance providers worldwide remain committed to serving their clients’ best interests. According to a press release on PRNewsire, the leaders attending the meeting officially endorsed the six principles of client protection in microfinance launched by the campaign at the Clinton Global Initiative in September, 2008. MicroCapital had previously reported on the official launch of the campaign; more information on the story can be found here. The press release states the meeting has a ‘sense of importance and timing’ given the current financial crisis sweeping the world and the increasing focus on interest rates and transparency.

The members of the committee include Clara Serra de Akerman, President, Women’s World Banking, Colombia; Daouda Sawadogo, General Manager, Federation des Caisses Populaires du Burkina (FCPB), Burkina Faso; Shireen Farrag, Executive Director, Sanabel Network, Egypt; Anne-Francoise Lefevre, Head of WSBI Institutional Relations, World Savings Banks Institute (WSBI), Belgium; Asad Mahmood, Managing Director, Global Social Investment Funds, Deutsche Bank, United States; Vipin Sharma, Managing Director, Access Development & Access Alliance, India; Kate McKee, Senior Advisor, CGAP, United States; and Elisabeth Rhyne, Managing Director, Center for Financial Inclusion at ACCION International, United States. A complete list of the members is available here.

The Steering Committee’s priorities for the Campaign include continuing to build a more ethical and transparent industry that holds true value for its clients; delivering quality financial services to all clients of microfinance; and establishing the microfinance industry as a model for responsible finance by ensuring that microfinance providers have the tools they need to implement the principles. This meeting was also featured on MicroCapital recently as a news wire. No information on the outcome of the meeting is publicly available.

MicroCapital had previously reported on the launch of the client protection campaign in September 2008. The campaign was initiated to unite microfinance providers in its commitment towards the appropriate treatment of low-income clients. Founding partners of the Campaign include Al Amana (Morocco), CGAP, Compartamos Banco (Mexico), Deutsche Bank, Freedom from Hunger, Grameen Foundation, Opportunity International, Pro Mujer and Women’s World Banking. The campaign also announced a commitment to engage at least half of the world’s 500 largest microfinance institutions (MFIs) reporting to the MIX Market within the next three years. The main purpose of the campaign is to ensure that providers of financial services to low-income populations take concrete steps to protect their clients from potentially harmful financial products and ensure that they are treated fairly. As part of its efforts to maintain and extend its dedication to client welfare, the campaign promoted a ‘Microbanker’s Oath’, articulating the following six core principles:

· Avoidance of over-indebtedness

· Transparent pricing

· Appropriate collections practices

· Ethical staff behavior

· Mechanisms for redress of grievances

· Privacy of client data

Founding partners of the Campaign include Al Amana (Morocco), the Consultative Group to Assist the Poor (CGAP), Compartamos Banco (Mexico), Deutsche Bank, Freedom from Hunger, Grameen Foundation, Opportunity International, Pro Mujer and Women’s World Banking. For more information on the campaign and its objectives, refer to this news wire featured on MicroCapital.

To date, 43 microfinance organizations, 50 microfinance investors, and 125 individuals have endorsed the Campaign for Client Protection in Microfinance. In addition to securing the commitment of MFIs to the six principles, the campaign also provides MFIs worldwide with tools – on-line assessments, training and communications materials – to ensure the campaign’s commitment to clients’ best interests. As of now, MFIs can download an abbreviated client protection self-assessment tool from the Campaign website.

Those interested to help shape the direction of the campaign are invited to take a brief survey. Interested participants can also sign up for updates to stay informed and involved with the progress of the Campaign.

The Center for Financial Inclusion at ACCION International is an industry-building initiative that works closely with a wide range of actors to tackle challenges surrounding financial inclusion. It is dedicated to the proposition that low-income people deserve high-quality financial services, and that those services are best provided through sustainable, commercial programs. Using tools such as convening, coalition building, research, information dissemination, training and piloting, the Center brings together nonprofits, commercial banks, technology firms, regulators, universities, and many others to address three principal topics: Investors and Microfinance, the Double Bottom Line, and Product and Process Breakthroughs.

By Bharathi Ram, Research Assistant