2 1.Client protection principles 2.The client perspective on transparency 3.Principle #3 in practice 4.Participant feedback 5.Tools for improving practice 6.Conclusion and call to action Agenda

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 1.Client protection principles 2.The client perspective on transparency 3.Principle #3 in practice 4.Participant feedback 5.Tools for improving practice 6.Conclusion and call to action Agenda

5 Lack of transparency affects the client and the MFI Lack of transparencyEffects the… Client… MFI… Client does not understand the maintenance fees for her savings account. Client is not aware that she receives only three free ATM withdrawals before incurring fees. Client believes that if she does not file an insurance claim, the premium will be returned to her …sees that her savings have decreased and thinks the bank has robbed her. …is demoralized and does not trust ATM transactions. …concludes that insurance is a scam when she does not have the premium returned. …loses business when client tells others about her experience. …loses benefit of investment in new technologies. …finds that products intended to add value and attract clients actually have the opposite effect.

6 I can easily understand the interest rate and compare it to other institutions. I know my installment amounts and when payments are due. I’ve never had unexpected: late fees, early payment fees, or account activity fees, changes to my interest rate or loan terms. The institution has explained my responsibilities for delinquent group members. I can easily find out the amount of my outstanding debt and the balance in my savings account. I am always given the opportunity to ask questions during my interactions with the institution. Can your MFI clients agree with the following? The client perspective on transparency

7 1.Client protection principles 2.The client perspective on transparency 3.Principle #3 in practice 4.Participant feedback 5.Tools for improving practice 6.Conclusion and call to action Agenda

8 Transparency The Principle in Practice: Providers will communicate clear, sufficient, and timely information in a manner and language that client can understand, so that clients can make informed decisions. Consider this: Transparency is a pre-condition to many of the other principles—foremost, responsible pricing.

9 Disclose information Train staff Provide total cost Disclose the prices, terms, and conditions of all products, including fees and information on the recovery process, and whether these can change over time. Train staff to communicate effectively with clients, including clients with literacy limitations. Follow truth-in-lending laws and required APR or EIR formulae. If no requirements, show at least the total cost the client pays. The Principle in Practice

10 Use multiple channels Allow time for questions Provide account information Use multiple channels for disclosing information, such as brochures, meetings, orientation sessions, posters, etc. Allow adequate time for clients to review information and ask questions prior to signing contracts. Regularly provide accurate account information, such as savings account balances and receipts for all transactions. The Principle in Practice

11 Good Practice: Increase client understanding Good practice: Make communication meaningful to the client. Good practice: Make communication meaningful to the client. Don’t use fine print. Can you read the bottom of this slide? Use plain language. Which statement is more meaningful? A. Non-repayment will result in action on the part of the institution at the immediate outset of the delinquency. B. The institution will begin the loan collection procedures on the first day the client is late. Fit the communication method to the client. Are your documents written in the local language? How would a blind person access your important contractual information? Don’t use fine print. Can you read the bottom of this slide? Use plain language. Which statement is more meaningful? A. Non-repayment will result in action on the part of the institution at the immediate outset of the delinquency. B. The institution will begin the loan collection procedures on the first day the client is late. Fit the communication method to the client. Are your documents written in the local language? How would a blind person access your important contractual information? Fine print is often overlooked by clients. Minimize the use of fine print.

12 Good Practice: Confirm client understanding Good practice: Confirm client understanding. Use: Call backs Check lists “Key facts” or FAQ document Glossaries for key terms Analysis of common complaints/questions to improve communication Use: Call backs Check lists “Key facts” or FAQ document Glossaries for key terms Analysis of common complaints/questions to improve communication

13 1.Client protection principles 2.The client perspective on transparency 3.Principle #3 in practice 4.Participant feedback 5.Tools for improving practice 6.Conclusion and call to action Agenda

14 Feedback from participants Have you received training from your institution that highlights transparent pricing? What effect does the competitiveness of the local microfinance market have on transparent pricing at institutions? Have you seen examples of lack of transparency?

15 1.Client protection principles 2.The client perspective on transparency 3.Principle #3 in practice 4.Participant feedback 5.Tools for improving practice 6.Conclusion and call to action Agenda

16 Technical Tools Getting Started Questionnaire: Self Assessment for MFIs Calculating Transparent Prices (MFTransparency) Putting Transparency into Practice: Communicating About Pricing Responsible Pricing State of Practice Technical Guide for Investors Samples and Case Studies Client Welcome Kit Loan Agreement for Small Business Clients from Crystal Loan Contract Summary Handout from MiBanco Transparent & Responsible Pricing at Mi-Bospo Tools available from the Smart Campaign

17 Pricing, terms, and conditions must be transparent (fully and clearly disclosed). Transparency allows clients to use products effectively and to make their own informed decisions. Clients need to have access to information that is meaningful to them. The Smart Campaign offers tools to help providers improve their transparency. Summary Call to Action: What next steps can your institution take to ensure that clients understand your products, as well as their own rights and responsibilities?

18 Thank you! Endorse the Smart Campaign. Visit Sign up to receive news and information. Download the Getting Started Questionnaire and conduct a client protection self-assessment.Getting Started Questionnaire What’s next? us!