> Posted by Juan Blanco, Associate, Financial Inclusion 2020, CFI

In the client protection section of the FI2020 Roadmap to Financial Inclusion, a specific recommendation was made for financial providers to embrace consumer protection as part of their professional identity, and applying a “financial consumer bill of rights” was identified as a key action point.

Looking into the state of this industry area for our upcoming FI2020 Progress Report on Financial Inclusion, I came to realize that the subject of consumers’ bills of rights is not as straightforward as it seems. Although the recommendation from the roadmap was aimed specifically at providers, the truth is that this is an area where a diversity of players is getting involved. I found a range of approaches: codes of conduct, codes of ethics, charters of rights, and bills of rights, coming from a wide spread of stakeholders, from MFIs to global associations to governments. At the heart of each of these initiatives was the same objective: for service providers to operate ethically and responsibly.

Isabelle Barres, Director of the Smart Campaign, pointed out the distinction between codes of conduct and a client bill of rights: codes of conduct tend to be inward-facing, targeting the institution’s employees, while clients’ bills of rights are outward-facing and have the mission of informing the institution’s clients. An example of a code of conduct from Ujjivan, in India, can be found here, and a client bill of rights from Finamerica, in Colombia, here. Other recent developments in this sphere include the release of a Code for Consumer Relationships from the Association of Banks of Peru for all their member institutions, which focuses on ensuring that consumers have access to clear and simple information in order to make better financial decisions. And moving into the digital financial services world, GSMA recently released a code of conduct for mobile money providers. This code has been endorsed by Airtel, Avea, Axiata, Etisalat, Millicom, MTN, Ooredoo, Orange, Telenor, Vodafone, and Zain.

A consumer bill of rights originating at the government level is different from institutional versions because of its greater authority and widespread applicability. Like the Charter of Customer Rights released by the Reserve Bank of India at the end of last year, a client bill of rights should be enforceable and countrywide in scope.

Although there are numerous examples of these codes and bills, this doesn’t necessarily mean that institutions are actively applying these principles. As Susy Cheston, Senior Advisor with FI2020, remarked: “Just because an institution has a code of conduct doesn’t mean they are keeping their clients in mind and vice versa.” The real question is, how are these codes shared with institutions’ staff and how are they enforced? Likewise, how are bills of rights marketed to clients and how can they effectively operationalize those rights?

That is where certification comes in. The Smart Campaign’s certification program provides a third-party confirmation that an institution actually lives by its code of conduct. Daniel Balson, Lead Specialist for the Smart Campaign, interviewed VisionFund Azercredit, which recently achieved Smart Certification. VisionFund Azercredit pointed out that being certified has been important for recruiting and retaining staff, for clients increasing their financial literacy, and it has helped them hone their messages to investors.

Ujjivan, which is also Smart Certified, offers a noteworthy example. The Ujjivan code of conduct includes six sections: Integrity, Quality of Service, Transparency, Fair Practices and Ethical Behavior, Privacy of Client Information, and Feedback and Grievance Redressal Mechanisms. The code drills down into each section, outlining core values and operating guidelines. The Ujjivan code of conduct encompasses the RBI’s Fair Practices Code for NBFC-MFIs, a code of conduct developed by MFIN and Sa-Dhan, and presumably it will implement a policy enshrining what’s included in the RBI’s new Charter of Customer Rights.

Indeed this will remain an industry area to watch as the importance of ensuring client protection continues to gain traction among more players.

We would love to hear more examples for our FI2020 Progress Report. Do you know of any institutions that have improved their operations and client relationships through some kind of client bill of rights or code of conduct?

Have you read?

eCPPs: How a Principles Approach to Client Protection Is Built for the Digital Age

Behavioral Research and the Client Protection Principles

Evidence on the Business Case for Client Protection