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Client Protection Principles: An Investor’s Perspective

Client Protection Principles: An Investor’s Perspective. Ging Ledesma Manager Social Performance Oikocredit 29 November 2010. Oikocredit in brief. Cooperative society; €475 million in share capital from members Oikocredit finances 847 project partners in over 71 countries

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Client Protection Principles: An Investor’s Perspective

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  1. Client Protection Principles: An Investor’s Perspective Ging Ledesma Manager Social Performance Oikocredit 29 November 2010

  2. Oikocredit in brief • Cooperative society; €475 million in share capital from members • Oikocredit finances 847 project partners in over 71 countries • 583 microfinance institutions (MFIs) • € 345 million outstanding in microfinance • Global network of 35 offices

  3. Paying attention to Client Welfare and Benefit • Endorsement of Client Protection Principles in 2008 • Circulation of Principles to all partners • Survey on over-indebtedness among partners and networks • Survey on multiple borrowing (Peru)

  4. Inclusion of a clause on client protection principles in loan documents Article 17. General Undertakings Client Protection Principles.  To ensure protection of its clients, Borrower in its capacity as a provider of financial services agrees to comply with the following Client Protection Principles as defined by the SMART Campaign: Avoidance of over-Indebtedness, transparent and responsible pricing, appropriate collections practices, ethical staff behaviour, mechanisms for redress of grievances, and privacy of client data.

  5. A changed and changing environment in microfinance Banks Making Big Profits From Tiny Loans”, New York Times, 15 April 2010 “Does microfinance really help the poor?” CGAP, January 2010 “Making money out of poor people?” The Hindu, April 2010

  6. ESG Scorecard: tool for due diligence • 5 dimensions, 22 questions, 44 points • Outreach & Targetting • Client Welfare & Benefit • Governance • Environment • Responsibility to Community & Staff

  7. Client Protection in the ESG Scorecard

  8. ESG Scorecard

  9. ESG Scorecard

  10. SMART Assessments • Training in doing client protection assessments • Workshop on client protection principles for MFI partners • Cambodia • Philippines • India • Investor Principles

  11. Challenges • MFIs are looking for support and guidance • Consultants • Practical, easy to administer tools • Need to harmonize – ratings, audits, assessments

  12. Thank you!

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