> Posted by Alex Rizzi and Leah Wardle, Deputy Director and Tool Development Specialist, The Smart Campaign, CFI

The Smart Campaign will soon launch its certification program on client protection for microfinance institutions (MFIs). In this fourth post in a series, Smart Campaign members Leah Wardle and Alex Rizzi discuss how experience from the field sheds light on standards that are often overlooked by MFI managers but are a crucial part of client protection. 

A Dominican loan officer once told me that if I really wanted to know what clients thought of the institution, I should ask a client who had already exited the program. These are the only people, he told me, who speak honestly about the institution’s failures.

In some ways, he was right about exit clients. They have little to lose, and can freely complain about their former lender without repercussion. But I think MFIs should also expect to hear from current clients, and to address problems before they lead to client exit. The key is to have a complaints system that is easy for clients to use (so they’ll actually complain if they need to) and to respond quickly to issues (so the concern is addressed). Increased client satisfaction is one of those fantastic “win-win” achievements, and the effective handling of client complaints is one way to get there.

At a high level, the Smart Campaign Certification standards require that an institution a) has policies and procedures that provide a straightforward way for clients to submit complaints, b) teaches clients (and staff) how to use the system. The institution should also c) have a protocol for resolving complaints in a fair and timely way, and d) should ultimately analyze trends in the complaints data to improve their operations.

At the Smart Campaign, we’ve observed many different complaint systems in the field, ranging from the high-touch/low-tech customer service desk, to the low-touch/high-tech Facebook page. In many cases there is no formal system at all and the staff receives verbal complaints from clients but does little to record the information for institutional use. Perhaps the most common complaints channel we’ve observed in the field is the office suggestion box. While easy for clients to understand and inexpensive for the institution, the Smart Campaign Certification standards do not consider a suggestion box an adequate standard of care. Suggestion boxes fall below an adequate standard because they do not provide an opportunity for individual clients to resolve their problems or to receive a response from an institution. In short, a suggestion box is not a problem resolution system.

The Smart Campaign Certification standards set benchmarks for problem resolution that allow for a range of solutions to be used depending on institution size and contextual issues, such as client literacy and preferred communications methods. Just as technology has revolutionized other aspects of microfinance, it offers innovative and user-friendly mechanisms for collecting and analyzing client complaints. A few innovations we have observed in the field include:

  • Call centers with toll-free numbers. This works well in the many countries where clients have high access to cell phones (see this Smart Note for an example).
  • Phone numbers that accept text messages from clients, including some which ask clients to respond to client satisfaction questions via text message (see this Smart Note for an example).
  • Social media or email addresses that allow clients to send questions and complaints to the institution.
  • Institution-sponsored events during which clients can make direct complaints or ask questions of senior management.

These systems are typically low-cost for clients, easy to access, and in most cases, give clients a way to make complaints privately and, if they wish, anonymously. They also create systems for data to be aggregated and used at the institutional level. With these criteria met, it’s safe to expect that an MFI will hear from clients before a situation gets so bad that the client leaves the institution. Such a system makes it more likely that when a client has a problem the institution can ask “how can we fix this situation?” rather than “how can we get you back?”

Image credit: Transitions Abroad

Have you read?

Straight Talk on Client Protection – Monitoring Client Indebtedness

Straight Talk on Client Protection – Hiding Fees When Quoting Interest Rates

New Smart Note: Responding to Complaints at Tameer Bank, Pakistan