Isabelle Barres,
Director, the Smart Campaign
Center for Financial Inclusion at ACCION
April 19, 2011

Timeline of the Development of Principles
2010
2008
2004
•
ACCION adopts a statement of principles developed by the MicroFinance Network
(MFN)
•
Pocantico
Declaration from microfinance leaders emphasizes client protection failures
2008 & 2009
•
Center for Financial
Inclusion’s Beyond
Codes project and
•
The Smart
Campaign defines six client protection principles dialogue groups produce learning on client protection
2011: Discussions on how principles should be

The Client Protection Principles
Revised (Proposed)
1. Appropriate Product Design
Prevention of overindebtedness becomes a lead issue under credit
Original
1. Avoidance of Overindebtedness
This principle was initially appropriate product design (though generally cited as avoiding overindebtedness)
Products and delivery channels will be designed with the intent to provide value to clients. Providers will analyze the appropriateness of products and channels with a high expectation that responsible use will not cause clients harm, and in particular will not lead to overindebtedness.
Core elements include : suitability; simplicity; affordability; suitable product delivery; no waivers of client rights; and minimum changes.
3

The Client Protection Principles
Revised (Proposed)
2. Transparency
Original
2. Transparent and Responsible Pricing
Separated in order to highlight the importance of transparency as a basic principle while retaining the focus on responsible pricing.
Providers will communicate clear, sufficient and timely information in a manner that clients can understand, so that clients can make informed decisions. The need for transparent information on pricing, terms and conditions of products is highlighted.
Core elements include : clear use of language; complete cost information; timely provision of information; advising clients of their rights; and transparency issues when using banking agents.
4

The Client Protection Principles
Revised (Proposed)
3. Responsible Pricing
Original
Separated from Transparent Pricing.
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.
Core elements include : price-setting process, fees and setting returns on deposits.
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The Client Protection Principles
Revised (Proposed)
4. Responsible Treatment of Clients
Collections practices are highlighted
Ethical staff behavior is included here
Introduces a new item: non-discrimination
Original
3. Appropriate Collections Practices
This is credit-focused and so needed to be subordinated to a more inclusive item.
4. Ethical Staff Behavior
Moved to Responsible treatment of clients
Financial service providers and their agents will treat their clients fairly and respectfully. They will not discriminate. Providers will ensure that adequate safeguards are in place to detect and correct corruption as well as aggressive or abusive treatment by their staff and agents, particularly during the loan sales and debt collection processes.
Core elements include : commitment to a code of ethics; nondiscrimination; appropriate sales techniques and staff incentive structure; preventing corruption; and client feedback.
6

The Client Protection Principles
Revised (Proposed)
5. Effective Complaint Resolution
Unchanged except for new name
Original
5. Redress of Grievances
Providers will have in place timely and responsive mechanisms for complaints and problem resolution for their clients and will use these mechanisms both to resolve individual problems and to improve their products and services.
Core elements include : complete policy and procedures for managing complaints; ensuring effectiveness; and advising clients of their rights.
7

The Client Protection Principles
Revised (Proposed)
6. Privacy of Client Data
Unchanged
Original
6. Privacy of Client Data
The privacy of individual client data will be respected in accordance with the laws and regulations of individual jurisdictions. Such data will only be used for the purposes specified at the time the information is collected or as permitted by law, unless otherwise agreed with the client.
Core elements include : information security; information provided to clients about their rights and responsibilities; waivers of privacy rights; data that could be used for discriminatory purposes; and sharing client data.
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The Client Protection Principles – Summary
Revised (Proposed)
1. Appropriate Product Design
Prevention of overindebtedness becomes a lead issue under credit
2. Transparency
Original
1. Avoidance of Overindebtedness
This principle was initially appropriate product design (though generally cited as avoiding overindebtedness)
2. Transparent and Responsible Pricing
Separated in order to highlight the importance of transparency as a basic principle while retaining the focus on responsible pricing.
3. Responsible Pricing
4. Responsible Treatment of Clients
Collections practices are highlighted
Ethical staff behavior is included here
Introduces a new item: non-discrimination
3. Appropriate Collections Practices
This is credit-focused and so needed to be subordinated to a more inclusive item.
4. Ethical Staff Behavior
Moved to Responsible treatment of clients
5. Redress of Grievances 5. Effective Complaint Resolution
Unchanged except for new name
6. Privacy of Client Data
Unchanged
6. Privacy of Client Data
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• April 2011 : public comment period
• May 2011 : incorporate feedback
• June 2011 : present to
Smart Campaign Steering
Committee
• July – December 2011 : develop roll-out plan for new principles; add indicators
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Thank you!
> Download Revised 2-page CPP Document
Please let the Smart Campaign know if you agree with these revisions by April 30, 2011, by sending an email to comments@smartcampaign.org
> Download CPP Guidance Document
If you wish to comment on or contribute to this document, please send an email to comments@smartcampaign.org
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