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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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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

Embed from Getty Images

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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> Posted by Robin Brazier, Communications and Operations Associate, the Smart Campaign

March 15 is World Consumer Rights Day (WCRD), a day marked by the consumer movement each year to raise global awareness about consumer rights and needs. It’s an opportunity to demand that the rights of all consumers are respected and protected, and to protest against market abuses and social injustices which undermine those rights. The Smart Campaign marks this occasion by talking about the importance of transparency and grievance redressal as key tenets of client protection and building consumer trust.

WCRD’s theme this year is “Making Digital Marketplaces Fairer.” With the volume of online transactions increasing, consumers are exposed to new – sometimes not fully understood – risks. For this reason, WCRD 2018 is calling for access to fair and secure internet for all, action against scams and fraud, and better consumer protection online.

According to Consumers International, nearly half of consumers that have access to internet but do not shop online cite lack of trust as the reason. Similarly, almost 70 percent of online consumers worry their digital payments are unsafe. What contributes to this lack of trust? The causes vary, but they often hinge on two things: lack of transparency and insufficient grievance redressal mechanisms.

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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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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 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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> Posted by Ana Ruth Medina Arias, Lead Specialist for Latin America and the Caribbean, the Smart Campaign

“The risk is to regulate by anecdotes and not by evidence.” – Mariela Zaldivar, Deputy Superintendent, the Superintendency of Banking, Insurance and Private Pension Fund of Peru (SBS Peru)

In recent years, Peru has called for our attention not only for being at the top of the Global Microscope’s international country rankings for the most conducive environment for financial inclusion, but also for its historic collaborative effort to establish a fully-interoperable nationwide digital payments platform (Bim) to support the supply of financial services. But buckle up, there is more.

The country’s regulator, the Superintendency of Banking, Insurance and Private Pension Fund of Peru (SBS Peru), has taken client protection very seriously, and despite already having very robust systems (on grievance redress and dispute resolution, for example), it continues to lead with groundbreaking policy changes based on evidence and research to ensure that regulation is aligned with the needs and capabilities of the end client. The Smart Campaign is proud to have collaborated with the SBS on these policy changes.

Client Voices was a research project of the Smart Campaign that directly asked clients in four countries (Peru, Benin, Georgia and Pakistan) about their experiences with financial providers and what they thought constituted good and bad treatment. In Peru, the project was made possible through strong support from the SBS, which was involved from the very beginning, providing substantive inputs to all project phases. However, their engagement did not stop there. The SBS is also committed to implementing the client protection recommendations arising from the project.

Here is how the SBS turned the major findings of the research into an opportunity for policy improvement in the area of financial consumer protection.

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> Posted by Elisabeth Rhyne, Managing Director, CFI

Client of Akiba Bank in Tanzania

Around the world today, financial service providers, technology entrepreneurs and policy makers are engaged in building a financial system that reaches out to previously excluded people, such as lower income people, very small businesses, rural dwellers, and women. Although this work is carried out in the name of the consumer, all too often, scant attention is paid to the real needs and desires consumers and very small enterprise owners have.

With that in mind, here is a thought experiment. A thought experiment is an “exercise of the imagination used to investigate the nature of things.” The question for this experiment is this:

Imagine that consumers were the creators of the inclusive finance system. What would such a system look like?

What characteristics would emerge if the needs, desires and preferences of the target customers of financial inclusion were the driving force to shape their services? The observations here are drawn from consumer research conducted or commissioned by the Center for Financial Inclusion, including research in Peru, Pakistan, Georgia and Benin for the Client Voice project of the Smart Campaign, in Kenya and India for our project on financial health, in India and Mexico for our study of financial capability, and again in Kenya and India for two CFI Fellows’ projects on the role of human touch in the digital age. I offer ten propositions based on this research.

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> Posted by Sonja Kelly, Director of Research, CFI

In ethics, there is a commonly shared thought experiment called the trolley problem. You are standing next to trolley tracks, and a trolley is coming. In its current trajectory, it is going to run over five people who are tied to the tracks. You could divert the train using a lever in front of you, but then the trolley would hit one person tied to the tracks. Do you become active in this scenario and sacrifice the one person? Or do you abstain from involvement and watch the five people get run over?

I don’t mean to be morbid here, but this is a thought experiment that I have been mulling over when it comes to financial inclusion.

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> Posted by Robin Brazier, Communications and Operations Associate, the Smart Campaign

U.S. Capitol BuildingLately, so much has been happening in Washington, D.C. that it feels impossible to keep up. Every day is a whirlwind of new developments. The Smart Campaign has been keeping its eye on one bill in particular: H.R. 10, the Financial CHOICE (Creating Home and Opportunity for Investors, Consumers and Entrepreneurs) Act of 2017. Among its other provisions, the Financial CHOICE Act threatens to disarm the Consumer Financial Protection Bureau (CFPB) and compromise the well-being of financial service consumers in the United States.

Introduced by House Representative Jeb Hensarling (TX-5) in April, the CHOICE Act, according to its sponsors, would loosen the allegedly burdensome and complicated regulations put in place by the Dodd-Frank Act of 2010 with the stated goal of increasing financial services access for small businesses and spurring economic growth. These small businesses are said to be having a difficult time getting loans from small banks due to Dodd-Frank, and the CHOICE Act would purportedly lessen these difficulties and allow more small banks to lend to small businesses.

However, from where the Smart Campaign is sitting, the CHOICE Act looks quite different.

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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.