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> Posted by Drew Corbyn and Sascha Brandt, GOGLA

The following post was originally published on the GOGLA blog and has been republished with permission.

The consumer is the central figure of the off-grid solar sector. Demand from consumers has inspired our member companies to provide an ever-growing range of quality off-grid solar energy products and services. It is thus perhaps not surprising the industry is now taking the lead in developing a sector-wide code of conduct on consumer protection. It has committed to develop and implement a set of principles on how off-grid solar companies engage with customers.

GOGLA will spearhead the project with support from the DOEN Foundation. Over the next few months, we will work with members, investors and partner organizations to compile a code of conduct. The Sustainability Working Group will serve as the main platform for members to develop and agree to the framework and how it is operationalized. Their engagement is vital in producing a practical and meaningful framework that serves as the de-facto standard for off-grid solar consumer protection.

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Which topics would you most want to see researched?

> Posted by Sonja E. Kelly, Director of Research, CFI

Hi there. I would love your help as we select topics for our 2018 CFI Fellows research.

CFI is getting ready to launch the request for proposals for our 2018 Fellows cohort (a lot of you have been asking when it’s coming out, and the answer is SOON!). The CFI Fellows Program is designed to respond to questions we think are critical to the future of financial inclusion. Fellows come from many perspectives, including both relatively junior and senior well-known researchers, and including researchers who have been in the financial inclusion community for a long time and some who are perceptive outsiders. We share a set of topics for study, and ask interested researchers to submit research proposals that address the topic of their interest.

Our semi-final list of questions is long, and we ask for your help refining or prioritizing them – or adding new ones. We’ve enabled comments at the bottom of this post for your feedback. Alternatively, feel free to email me at skelly@accion.org.

Here are the questions we are currently considering:
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It’s not just social media. We need a fresh look at how financial data is protected, too.

> Posted by Elisabeth Rhyne, Managing Director, CFI

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Mark Zuckerberg defended Facebook’s handling of customer data yesterday before the U.S. Senate, and many of us at Accion and the Center for Financial Inclusion were riveted. Not that the testimony was especially compelling as television spectacle, but because the issues at stake are so important both for our own lives and for our work.

I did a quick scan of the staff here in our Washington, D.C. office, and would like to share some of their thoughts.

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We hope reading this post is just one of many activities you undertake today that acknowledge and celebrate the achievements of women. This International Women’s Day, we turned to a few of the women of CFI to share their thoughts on the gender gap facing lower income women around the world and ways to shift the balance in their favor.
 

Deborah Drake

Deborah Drake says, “International Women’s Day gives us a chance to appreciate the hard work and sacrifice women make every day for their families. It also highlights the challenges involved in giving women the opportunity for economic empowerment and the ability to make choices, including financial decisions for themselves and their families.” (As Vice President of CFI’s Investing in Inclusive Finance Program, Deborah leads the Africa Board Fellowship Program and the Financial Inclusion Equity Council.)
 
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The U.S. bail bonds system raises serious consumer protection concerns

> Posted by Allyse McGrath, Specialist, CFI

In a criminal justice system that accepts cash in exchange for temporary freedom, a predatory financial service has taken root and become yet another barrier. In the United States, bail bondsman and global insurance companies are netting between $1.4 billion and $2.4 billion annually from vulnerable people who are unable to pay the bail they need to remain out of custody before they are tried. This is not a new problem. It’s been going on since the early days of the modern U.S. criminal justice system.

Those accused of crimes are given an option to stay in jail or put up an amount of money (bail) for their release prior to trial. (It is important to note that people at this stage are presumed innocent under law.) The bail acts as a commitment device for people to show up to their court hearing. The bail amount is returned if the defendant shows up. If they do not, the court keeps it. Bail amounts vary greatly based on the severity of the crime in question as well as the potential flight risk of the accused party. The average bail amount for a felony arrest is about $10,000, roughly two months’ worth of the median annual income in the United States. In a study of nearly 30,000 cases where bail was set in New York City, only 37 percent of defendants could afford to pay bail.

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Consumer protection is a driver of revenue, and not a regulated compliance cost

> Posted by Dylan Lennox, Partner, MFX

Educating digital financial services (DFS) providers to understand that consumer protection is a core business strategy is as important – if not more important – than consumer protection regulation supervision if we hope to ensure that vulnerable consumers are well protected. For this reason, as I articulated in my last post, I would like to see DFS providers and their managers take the lead when it comes to driving consumer protection, and that consumer advocates and regulators’ efforts are aligned to make sure this happens.

There are many possible reasons why DFS managers are not taking the lead, however, beyond a general lack of awareness of consumer protection and its importance:

  • They might be driven to achieve short-term targets with limited resources, prioritizing their time, budgets and activities to meet high ROI expectations. Or they might be under pressure to launch innovations and take advantage of the “next big thing” like digital credit or data monetization.
  • They could lack the necessary knowledge and experience in their teams to properly address consumer protection. Such know-how involves truly understanding customers’ needs, developing intuitive user interfaces, designing appropriate sales incentive structures, assessing customers’ loan affordability, and implementing effective internal control frameworks to address security, loss of privacy, or fraud risks.
  • Or perhaps the technology they have implemented does not have the required functionality to properly implement basic consumer protection requirements – like those of data security, for example. In such a case, it is left up to the individual DFS managers to make specific technical developments to address consumer risks. Such an institution-by-institution approach increases the overall cost of consumer protection to the industry and decreases the likelihood that it will be implemented as these measures compete with other priorities.

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> Posted by Dylan Lennox, Partner, MFX

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After launching and operating mobile money businesses in a number of markets over the last ten years, I was aware of the necessity of protecting consumers. I knew it was a regulatory priority alongside important issues such as AML and interoperability, but that’s where I left it: in the compliance box, while I waited to be told what to do. All the consumer protection literature I read gave me the same heavy feeling, laden as it is with long lists of requirements: protect customer’s funds from loss and fraud, ensure proper disclosure and transparency, keep their data private, make sure customers can have their complaints resolved, and so forth. These looked like the core business processes I needed to implement anyway, so I felt we would be in fine shape if we were ever to have a supervisory inspection. I never looked any deeper.

In the days when enabling regulation meant “Please leave us alone to grow,” I kept my head turned firmly in the direction of my business goals, growing a base of active customers to reach scale, and then taking advantage of those network effects. After all, financial inclusion was also an objective we shared with the regulator, and as long as we were growing they maintained a light touch.

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> Posted by Sonja E. Kelly, Director of Research, CFI

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As we have watched events unfold in Iran, it has become increasingly clear that major problems with stability and security of funds in the financial system is a driver of civil unrest and political instability.

Over the last few weeks more than a dozen people have been killed and thousands have been arrested in demonstrations across the country. These demonstrations have involved tens of thousands of people in the most significant public display of opposition that the government has seen in a decade. The magnitude of this unrest is significant, and global concern is growing.

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> Posted by Carmen Paraison, Senior Program Associate, Africa, the Smart Campaign

Nigeria has an ambitious target of including 70 percent of its population in the formal financial services fold by 2020, from a baseline of 44 percent with access to an account in 2014. But financial inclusion involves a lot more than account access. The Center for Financial Inclusion defines financial inclusion as a state in which all people who can use them have access to a full suite of quality financial services at affordable prices delivered by a range of providers in a competitive market with convenience, dignity and consumer protections, to financially capable clients. Protection for consumers is an important part of that definition, and I recently had the opportunity to visit Lagos to learn more about consumer protection challenges in the country. In particular, I wanted to see how Smart Certification can help Nigeria reach its financial inclusion goals in a way that provides benefits to customers.

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If digital financial services are so convenient and affordable, why are uptake and usage rates among individuals with lower incomes so low? Monique Cohen explores the mismatch between products and money management needs.

> Posted by Monique Cohen

This maxim governs much of our financial lives, rich or poor. Yet, we offer financial services to the unbanked and underbanked, largely ignoring it. The thinking around customer centrality as it affects financial services for the poor emphasizes appropriately responding to people’s needs and wants for financial services. But, as Kim Wilson pointed out, this is still not happening:

We have an agenda, which is this: please be our customer, have your needs, express them so long as they are about digital payments or failing that, using a bank account – a lot – and preferably, digitally. Else, we don’t give a damn. We don’t care about your archaic methods… We desperately want and need you to modernize, to become just like us. Otherwise we have no justification for all the work we do and all the money we spend.

Until now the perceived drivers of uptake of digital financial services (DFS) have been their assumed attributes of convenience, timeliness and affordability, relative to current formal and informal financial service offerings. However, with uptake and usage levels of only 30 percent for digital financial services, it is clear that this rationale falls short. Impediments to high usage continue to be overlooked.

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Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.