Principle # 5 – Fair and respectful treatment of clients

1. Principle # 5 – Fair and respectful treatment of clients This presentation is made possible by the Smart Campaign www.smartcampaign.org

2. Agenda Client protection principles Principle #5 in practice Participant feedback Tools for improving practice Conclusion and call to action

3. 1. Appropriate product design and delivery 2. Prevention of over-indebtedness 3. Transparency 4. Responsible pricing 5. Fair and respectful treatment of clients 6. Privacy of client data 7. Mechanisms for complaint resolution Client Protection Principles

4. Agenda Client protection principles Principle #5 in practice Participant feedback Tools for improving practice Conclusion and call to action

5. Fair and respectful treatment of clients The Principle in Practice: Providers and their agents treat clients fairly and respectfully. They do not discriminate. They will ensure safeguards are in place to detect and correct corruption. Consider this: Most abuses happen during the loan sales and debt collection processes—these need special attention by providers.

6. The Principle in Practice

7. The Principle in Practice

8. The role of management • Creating a Code of Ethics for the institution. • Communicating the importance of ethics to staff on a regular basis. • Training staff to respond to ethical dilemmas tailored for their position. • Empowering managers to follow up on ethical complaints. • Establishing an Ethics Committee that rewards ethics and sanctions violations. Training today: Handling delinquent clients

9. The code at the center

10. Examples of inappropriate practices Offensive language and threats Unethical seizure of property • Collections agents enter a client’s home and/or seize property without a judicial order. • The institution accepts collateral that may deprive borrowers of their basic survival capacity. Subcontracting to unethical businesses • The institution subcontracts collections to businesses that are not subject to the same ethical standards as the institution. Careless debt extension • The institution issues automatic debt extensions. • Credit staff uses offensive or abusive language. • Collections agents threaten clients or harass them at work, home, or their place of worship.

11. Effects on the client and the institution Clients mistrust the institution, and tell others.

12. What a code of ethics includes Harassment Use of Company Property Safeguarding the Company Reputation Respecting the Work Environment Source: Adapted from Compartamos Banco

13. Keeping a code “alive” Source: Compartamos Banco

14. Good Practices from Around the World One MFI includes “ethical behavior” in its annual performance reviews in order to give employees feedback on their behavior and find out how successful the organization has been in building an ethical culture. Another MFI designed a training program on ethical behavior that includes specific ethical dilemmas for different job functions. The training modules are based on experiences that employees face at work.

15. Agenda Client protection principles Principle #5 in practice Participant feedback Tools for improving practice Conclusion and call to action

16. Feedback from participants Have you received training at your institution that highlights ethical staff behavior? Appropriate collections practices? Can you describe an ethical lapse or ethical success at your institution or elsewhere? What kinds of collections practices have you seen at your own (or other) MFIs?

17. Agenda Client protection principles Principle #5 in practice Participant feedback Tools for improving practice Conclusion and call to action

18. Tools available from the Smart Campaign

19. Conclusion

20. Feedback from Participants Endorse the Smart Campaign. Visit www.smartcampaign.org Sign up to receive news and information. What’s next? Download the Getting Started Questionnaire and conduct a client protection self-assessment. Email us! comments@smartcampaign.org