Implementing Client Protection in Microfinance: The State of the Practice, 2011
This report explains how stakeholders throughout the microfinance industry are graduating from awareness raising about client protection to capacity building, implementation and certification. It analyzes how the industry is doing on the Client Protection Principles (CPPs) introduced in 2008 to make the commitment to client well-being explicit and actionable.
This report gathered information on CPP implementation through case studies, self reported data by MFIs and third party assessments. Preventing overindebtedness, transparency, and staff ethics are some of the principles that constitute CPP. Some of its findings include:
- Raters and investors pay most attention to overindebtedness when they assess MFIs. To avoid over-indebtedness in high-competition zones MFI requires credit bureaus or limits on the number of institutions a client can borrow from at once;
- Transparency, with pricing disclosure as its core component, scores generally high with MFIs;
- Responsible pricing is the lowest scored CPP.
The report concludes by providing some assurance that the current state of practice among MFIs supports the basic tenets of client protection. But there is more to be done to ensure clients around the world are fully assured of safe, respectful, and transparent treatment.
