Fair and respectful treatment of clients

1. Fair and respectful treatment of clients

2. Objectives Understand the importance of fair and respectful treatment of clients Understand how a FI creates and maintains high standards of ethical behavior towards clients.

3. Effects on the client and the institution “My younger sister’s husband died. We told [the loan officer] it’s her mourning period, and she can’t come. Then she said if she will not come, then we will not give another loan. It’s inhuman.”Woman, Karachi, Pakistan Clients mistrust the institution, and tell others.

4. 13% Clients that have experienced public shaming incidents in Beninand Pakistan. 9%

5. Example from research findings on client experience Attributes valued by clients in each market Benin -Thoughtful presentation - The opportunity to negotiate - A warm welcome - Reciprocal trust in clients Pakistan - Respect - Humanity (insaaniyat) - Compassion and dignity - Interest in establishing a long-term relationship Clients mistrust the institution, and tell others. Georgia - Clear explanation of information - Long-term cooperation - Recriprocal trust in clients - Warmth Peru - Extension of a helping hand - Clear explanation of information - Thoughtful presentation - Genuine interest in clients

6. Principle in Practice Providers and their agents treat clients fairly and respectfully, as defined in the institution’s code of conduct. They do not discriminate in both client selection and treatment and will ensure safeguards are in place to detect and correct corruption and aggressive/abusive treatment from staff and agents. Consider this: Most abuses and discrimination happen during the loan sales and debt collection processes—these need special attention by providers. Codes of conduct should define sanctions.

7. The code at the center

8. Role of Management • Create a Code of Ethics for the institution. • Communicate the importance of ethics to staff on a regular basis. • Train staff to respond to ethical dilemmas tailored for their position. • Empower managers to follow up on ethical complaints. • Establish an Ethics Committee that rewards ethics and sanctions violations.

9. Adequate Standards of Care Promotes and enforces respectful treatment of clients through Code of Conduct. Policy to avoid discrimination against protected categories in client selection Defined apt debt collection practices by staff and 3rd party Effective systems to prevent and detect fraud Insurance claims are processed in a fair/timely manner Management and oversight support for fair and respectful treatment of clients.

10. CPP #5: Adequate standards of care Respectful treatment of clients promoted and enforced through Code of Conduct. • CoC is wel defined, includes sanctions • Staff and clients know about CoC • CoC informs and aligns with HR policies (e.g performance evaluations include) • Staff and 3rd Party trained on CoC Policy prevents client discrimination • DefinedProtectedCategories • Terms and conditions onlydiffer based on Risk Analysis, Target Market, and specialneeds • No agelimitbiases

11. CPP #5: Adequate standards of care Policy clearly defines appropriate debt collection practices • Define appropriate and inapproriate in policy • Clients know polices and options • Allow time to determine reasons for default. • Staff/Client trained. Verify 3rd party training. • Rescheduling can be case by case basis • Policy & management cover collateral • Proportional, reasonable, secured seizures • Clients not forced to sell collateral to pay debt Systems are in place to prevent and detect fraud • Process for incorrectly completed transactions • Payments: if not cashing out, funds returned w/ notification • Savings secured

12. CPP #5: Adequate standards of care Insurance claims are processed fairly and quickly • Claims settled w/in 30 days or less • Claimants notified when changes • If claim denied, also notified w/in 30 days of filing Management prioritizes fair and respectful client treatment • Part of audit and management reviews of key results • Evidence and records

13. 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 places of worship.

14. Examples of correct practices • Policy that clearly defines examples of inappropriate debt collection practices is enforced • Management reviews key results related to fair and respectful treatment of clients such as customer surveys and conducting their own client visits • When an insurance claim is denied, claimants are provided reason for rejection and receiv within 1 month of claim

15. Examples of correct practices • Independent internal audit team checks for fraud related to client savings. • Collateral seizing is respectful of clients' rights:. does anyone have an example from their instiution?

16. Tools available from the Smart Campaign

17. Key Messages App prod design is relevant in CP because FIs often deal with inexperienced clients that do not necessarily have the knowledge/experience to determine if the product provides good value for the money. Product suitability must be incorporated at all levels of an FI from board policies to staff training MFIs that listens and learns from their client are more likely to succeed than who imitates others product/services in the market. Moderate sales techniques should be used to deliver products/services. Aggressive sales must be defined. Third parties must be vetted with client in mind