The goal of the Smart Campaign is to promote the adoption of consumer protection principles and practices as part of the DNA of the microfinance community. As the Campaign founders build the coalition, they will work to reach industry-wide consensus on the core principles, and facilitate practical steps toward implementing them. The campaign is anchored around a statement of key principles that draws heavily on previous work carried out by national microfinance associations, international networks, and individual retail providers to develop codes of conduct for client protection. The principles will be formulated as a 'Microbanker's Oath,' in the spirit of the Hippocratic Oath. Ultimately, the hundreds of thousands of people working in the industry will be encouraged to personally sign the Oath via a Campaign website. The Campaign Action Plan is geared to reach 50 percent of the largest 500 microfinance institutions reporting to the Mix Market (www.mixmarket.org), which together serve some 30-35 million borrowers.
The Six Principles are as follows:
1) Borrowers have adequate repayment ability for loans and are not at significant risk of over-indebtedness and non-credit products (e.g., insurance) are appropriate for clients.
2) The pricing, terms, and conditions of financial products (including interest charges, insurance premiums, all fees, etc.) are transparent, adequately disclosed to the client, and fair.
3) Collections practices are not abusive or coercive.
4) Staff comply with high ethical standards in their interaction with clients and adequate safeguards are in place to detect and correct corruption and mistreatment.
5) Clients have access to timely and responsive mechanisms for complaints and problem resolution.
6) The privacy of client data is respected and such data cannot be used for other purposes without the express permission of the client, while recognizing that providers should help clients achieve the benefits of building credit histories.
Building the Coalition.
A core group of founding partners are taking the lead in launching the campaign, overseeing its direction, and reaching out to a widening circle of participants. The 'membership' will grow over time to become a broad coalition of all relevant stakeholders, with a goal of incorporating every major player in the microfinance industry into the group, and to feel a strong sense of ownership and investment.
Materials and Messaging
The campaign needs distinctive, compelling materials for communication with all the relevant audiences. These should be designed with assistance from a professional public advocacy firm. Materials would include a campaign name, the oath, explanatory materials and brochures, training tools, a website, etc. Begins November, 2008
A Meaningful Sign-On Process & Outreach Strategy
Sign-ons will be tracked by category, e.g., MFIs, Networks, individuals (professionals and other interested parties), investors, and other funders, etc. Most important are the MFIs. To deepen the engagement, a second level of sign-on could include actions steps, like board approval, staff training a plan for implementing each key principle, etc. The actual sign-on can be managed on a website.
Research is critical for success, and there are a variety of relevant research activities going on. Center for Financial Inclusion at ACCION International could engage experts to look at specific issues needed for the campaign. Some market research may also be needed to test messaging.
A campaign of this scale will require significant resources estimated at million per year. Donor support will be sought, and coalition members would all need to contribute at some level.
A business plan for the campaign that lays out the launch and unfolding of the campaign, assigns responsibility to various parties, sets goals, timelines and metrics, and lays out the budget.
The success of this commitment will be measured by the number of microfinance institutions reporting to the Mix Market on consumer protection policies.
Financial services have the power to help people improve their lives, sometimes dramatically so. However, if offered carelessly or used improperly, financial services can also cause harm. Microfinance institutions, because their clients are poor, must be especially careful to avoid taking unfair advantage of their especially vulnerable clients. Reckless lending--lending that exceeds the repayment capacity of clients--can seriously harm clients who become over indebted, and either make serious sacrifices to repay loans or remain mired in long-term debt. Microfinance leaders have expressed a strong desire to establish an industry-wide code of ethics for microfinance that assures fair financial treatment for their clients, particularly those borrowing money, and to actively assert the brand of microfinance as strongly pro-consumer. To do so, requires a very energetic response in which the whole industry participates, from CEOs to loan officers in the field.
SEEKING: Financial resources, best practice information, media/marketing opportunities
- Grants to support Smart Campaign operations including working with networks and associations, tool development, training and workshops, Website amplification.
- In-kind professional services such as translation, photography/videography, printing, website hosting, PR-marketing services, ad development and placement.
OFFERING: Best practice information
The Smart Campaign works with microfinance networks and investors in microfinance to provide their members/investees with education, assessment, and training to ensure the implementation of the core campaign principles broadly across providers of financial services to the poor.