2 Agenda Introduction to the Smart Campaign Client Protection Principles Available tools to strenghten client protection Certification Program Call to action and conclusion

3 Client protection: 3 pillars 3 Regulation for client protection and supervision RESPONSIBLE FINANCE Financial education and capability Standards and codes of conduct for the industry

4 The Smart Campaign… …represents a global, industry-wide effort: …has an international steering committee …collaborates with the Social Performance Task Force (SPTF), MIX Market Social Reporting, MF Rating Agencies, MFTransparency, and many others …is housed at the Center for Financial Inclusion at Accion International

5 Campaign Endorsers Globally

6 Vision of the Smart Campaign The Smart Campaign envisions a fundamental transformation of the microfinance industry in four key ways: Focus on clients All industry stakeholders will put the interests of clients first Transparent and prudent services MFIs will provide transparent, respectful, prudent financial services Full integration of client protection Client protection principles will be fully integrated into all microfinance operations Gain pro- consumer reputation The microfinance industry will be distinguished as leader in responsible finance

7 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 clients data 7. Mechanisms for complaint resolution Principles of client protection

8 Now is a critical time to focus on client protection, for several reasons: Demands for accountability and transparency Microfinance crises in several countries Negative media attention regarding impact Public and governmental concern over high interest rates Rapid growth, rising competition, and new players Why Now?

9 Smart Campaign Activities Outreach Partnerships with 30 national and regional associations Through endorsements and partnerships, touching organizations that serve over 40 million low income people Website and many tools available in 5 languages Participation in major conferences and events where client protection continues to be an important topic

10 Smart Campaign Activities Cont. Tool development and dissemination Now 60+ tools on 121,336 hits Trainings 53 Trainers and 61 Assessors 1,300+ managers and staff of MFIs trained Collaborations with key industry players CGAP, MFTransparency, SPTF, Raters, Investors

11 “My institution believes that client protection is important—but we need help improving practice!” The Smart Campaign offers over 50 practical tools to help financial service providers implement the client protection principles.over 50 practical tools All of the tools are available for download free of charge. New tools are added regularly. Improving Client Protection Practice

12 “How to” Guides Case studies Technical guides Example forms Training presentations Strategic planning guides Tools to Improve Practice Include:

13 Getting Started Questionnaire: Client Protection Self Assessment for Microfinance Institutions Principle Indicators Explanation of indicators Your score Institutional self-assessment

14 Sample results from Getting Started questionnaire: Educate: self-assessment (continued)

15 Certification Program The Client Protection Certification program is important: To enable financial institutions worldwide to demonstrate their adherence to the Campaign's client protection principles as verified by third-party Certifiers. To highlight publicly financial institutions who meet the minimum standards for client protection.

16 Timeline of the Certification Program October – December 2011 Public comment period: Open webinars for Q&A in:  Spanish– October 25  English – October 26  French – November 7 November 2011 – December 2012 Piloting period of standards and indicators January 2013 – June 2014 First Year Launch of Client Protection Certification Program with eligible specialized microfinance rating agencies. June 2014 – onwardRevisions to methodology based on first year learning. Expansion of coverage to full range of financial products. Licensing of additional certifying organizations. This schedule is subject to change.

17 How? The key elements of the content of the certification are as follows: Five major categories: governance, policies and procedures, staff incentives and staff training, compliance, and results. Organized Around Key adequate standards and Appropriate Indicators

18 Client Perspective: Clients Not subject to abuse Well Informed RespectedListened

19 CP Certification process summary 1. MFI shows commitment Endorses principles Conduct appropriate ex ante work to decide whether its time for Certification 2. Application FI: Contacts licensed certifiers listed on SC site Certifier: Prepares Certification Mission proposal If proposal accepted, contract negotiation and signature 3. Desk review - FI Has a public opt-to appear as ‘certification in progress’ Payment of first installment 3. Desk review - Certifier Sends FI the Certification Preparation Guide Provides initial feedback on desk review results 4. On-site visit FI: Cooperates as needed with Certifier Certifier: Conducts debriefing with the FI at the end of the visit 5. Certification Certifier: Conducts analysis and determines whether MFI passes or not, or whether they need to fix a few small things. SC: If passes Issues Certification. If fails SC tells them they failed. SC: Adds MFI name on SC website

20 Thank you! Endorse the Smart Campaign. Visit Sign upSign up to receive news and information. Download the Getting Started Questionnaire and conduct a client protection self-assessment.Getting Started Questionnaire us with questions or comments!