CLIENT PROTECTION – ARE WE THERE YET?

1. CLIENT PROTECTION – ARE WE THERE YET? Sadina Bina, Director EKI Microcredit Foundation Bosnia and Herzegovina

2. EKI Microcredi Foundation, B&HHighlights • Founded in 1996 by World Vision International as a Microcredit Programme, later transformed into a local institution - Microcredit Organization EKI • The mission of EKI is to reduce economic causes of poverty in Bosnia and Herzegovina • EKI today is one of top three Microcredit organizations at the B&H market with market share close to 17% in terms of portfolio • EKI serves a base with over than 37.000 clients and employs 270 people • EKI is recognized as an institution willing to introduce new ideas and projects

3. Contextual factors to Client Protection in B&H • Competitive market • Crisis: overindebtedness of clients & financial problems of MFIs • MFIs reputation • Supportive regulations: Central Registry,data privacy requirements

4. What is common by local regulation to CPP? • MCO’s are required to disclose the effective interest rates following a formula established by the Banking Agency. The effective interest rate must be published at all marketing materials and clearly stated at the loan contract. • MCO’s are required to submit annual audited financial statements to the Banking Agency, as well as to publish them in one or more daily newspapers. • MCOs are required to participate in the credit registry, submitting client data on a monthly basis .

5. What EKI does about client protection? • We support standing that protection of clients equals to protection of institution • Client Protection Program introduced and set up at EKI • Policy is adopted by the Board of Directors • The Policy is designed in line with the 6 Client Protection Principles (CPP) • CPPs are introduced to EKI staff, and EKI tends to make sure that all are aware of CPP importance • Senior Management Team is dedicated to implementation of the Policy

6. How CPP works at EKI? There are adopted practices including: • Establishment of an efficient system for preventing overindebtedness and protection of client privacy data • Formal policies for ethical behavior of staff • Transparency of information important to clients and flexible product offering Well developed polices and systems are fundament for effective client protection. However, there is a risk that staff practices at the field may vary between branches and individuals.

7. What EKI finds as very important about CPP? • The set up of a formal system for monitoring field staff practices • Strenghtening of soft skills of Loan Officers in terms ofcommunication with clients (i.e. effective communication of rights and obligations, product terms) • Including staff ethics (beyond professional conduct) into appraisal system • Comunicating continuous implementation of the principals at all levels of organization

8. Yet to be improved with CPP • Ensure that all MFIs to adopt and implement CPP • Make organizations distinctive in terms of CPP by clients and funders • Underscore benefits of the implementation of CPP for the organization and to customers • Making a difference between organizations that have only adopted policies and those where policies are implemented and applied • Introduce certification of organizations for the CPP

9. THANK YOU!