Protecting clients
Protecting clients should be a key concern every MFI. The Client Protection Principles are the minimum standards that clients should expect to receive when doing business with a microfinance institution.
The Client Protection Principles are:
- Avoidance of Over-Indebtedness. Providers will take reasonable steps to ensure that credit will be extended only if borrowers have demonstrated an adequate ability to repay and loans will not put the borrowers at significant risk of over-indebtedness. Similarly, providers will take adequate care that only appropriate non-credit financial products (such as insurance) are extended to clients.
- Transparent and Responsible Pricing. The pricing, terms and conditions of financial products (including interest charges, insurance premiums, all fees, etc.) will be transparent and will be adequately disclosed in a form understandable to clients. Responsible pricing means that pricing, terms, and conditions are set in a way that is both affordable to clients and sustainable for financial institutions.
- Appropriate Collections Practices. Debt collection practices of providers will be neither abusive nor coercive.
- Ethical Staff Behavior. Staff of financial service providers will comply with high ethical standards in their interactions with microfinance clients, and such providers will ensure that adequate safeguards are in place to detect and correct corruption or mistreatment of clients.
- Mechanisms for Redress of Grievances. Providers will have in place timely and responsive mechanisms for complaints and problem resolution for their clients.
- Privacy of Client Data. The privacy of individual client data will be respected in accordance with the laws and regulations of individual jurisdictions, and such data cannot be used for other purposes without the express permission of the client (while recognizing that providers of financial services can play an important role in helping clients achieve the benefits of establishing credit histories).
Putting client protection into practice
Read how to make good on your committment to protecting clients - from appropriate pricing, to putting in place grievance procedures and treating clients respectfully.
Putting a gender lens on client protection
Many MFIs have a gender dimension to their mission: stressing the need to help women improve their lives. Operationally, this translates into a need for gender equity towards clients as well.