Consumer Protection Principles in Practice: A Framework for Developing and Implementing a Pro-Client Approach to Microfinance

This ‘Progress Note presents a framework for developing and implementing pro-client principles, building on the experiences of the SEEP Network members over the last two years.The note:

• States that “pro-client” principles, with a pro-active approach to consumer protection, will encourage microfinance institutions (MFIs) to improve their practices.
• Illustrates the importance of developing consumer protection policies in the microfinance industry with descriptions of events where allegations of consumer abuse negatively affected MFIs.

The brief presents information about:

• The history of SEEP work on consumer protection.
• The four stages of constructing a “Consumer Protection Statement”: the phases of commitment, development, approval and implementation.
• Areas that require attention when putting a code into practice: Revision of human resources policies, marketing, operations, monitoring.
• The diverse approaches to consumer protection of the following organizations: ACCION International, ACDI/VOCA, CARE, the Association of Microfinance Institutions in Uganda (AMFIU), the Microfinance Network (MFN), Freedom from Hunger and Bank Rakyat Indonesia (BRI).
• Translating a consumer protection statement into action.
• The experience of various MFIs in the area of consumer protection.

The brief lists the six “pro-client” principles of the SEEP network:

• Quality of service;
• Dignified treatment;
• Truthful and transparent information;
• Appropriate pricing;
• Protection from unethical and illegal practices;
• Privacy of client information.

It concludes by listing ten tips that would make MFIs more client-friendly.