working groups - Consumer Protection

2010 Annual Conference and General Assembly

from 05/10/2010 to 09/10/2010

Accra, Ghana

From October 5th to 9th, 2010, the Africa Microfinance Network (AFMIN) will organize its 9th Annual Conference on the theme "Access to Financial Services: Reaching the Poor and Excluded"....

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Consumer Protection
The working group discussions are focus on the role of networks in promoting consumer protection. The discussions aimed to discover the current involvement and interest of AFMIN member networks in the area of Consumer Protection and to help develop a learning product on this topic.

1. Most networks responded that the issue of consumer protection is high on their priority list and the areas most important to them are:
- Understanding loan conditions
- Financial transparency of the MFI
- Understanding interest rates
- Understanding collections process
- Customer complaint resolution
- Privacy
2. Some of the reasons that prompted networks to get involved in this area include: Customer complaints, misunderstandings of interest rate determination, and illegal practices; member request; financial scandals within the sector; strategic decision as part of the development of the industry;

3. Most networks mentioned that they are addressing issues of consumer protection through
- Code of Ethics
- Performance indicators analysis
- Capacity building for members
- Central information exchange
- Consumer education and client awareness initiatives
- Assisting in arbitrations
4. Other actors involved in this area at the national level include: government, international donors, different ministries (economy and finance, microfinance unit, trade), central banks, reserve bank and consumer council

5. Examples of policies of how networks have assisted members to integrate consumer protection practices into their operations:
- Capacity building programs, best practice brochures and documents, and a program promoting respect for ethical principles.
- Code of ethics
- Awareness campaigns
6.Challenges
- Initial funding
- Member committment
7.Successes
- High commitment from members and key stakeholders
- Increased network visibility and role within the industry
- Increased access to information for clients
8. Networks plan to do the following activities in the future:
- Follow-up with members on the implementation of Codes of Ethics – for example by setting up auditing services for members
- Set up a compliance resolution system
- Collaborate with the government to ensure that there is a record of institutions who do not comply and rehabilitation measures before they are given a license.
9. Networks believed that the following stakeholders be responsible for:
- Government
               - To initiate an office of consumer protection independent of the financial services sector.
             - To enhance transparency of the pricing system of MFI financial services.
               - Policy documents and awareness
               - Regulations and enforcement mechanisms
- Consumer Advocate Organizations
- To create introductory programs on financial basics so that clients better comprehend and compare the alternatives available to them.
- Client financial education
- Regional Microfinance Networks
- To accompany microfinance sector actors and organize training sessions, information, and workshops focused on the question on consumer protection.
            - To enhance transparency of the pricing system of MFI financial services.
            - Popularization of the Code of Ethics and best practices in microfinance.
            - Empower the National Association with tools and best practices, capacity building to members of MFIs through exchange visits.
- National Microfinance Networks
               - To resolve consumer complaints.
               - To encourage information exchange between MFIs and clients so that the latter is supported to make better decisions.
               - To set up an appropriate Code of Ethics that defends consumers’ interests.
               - To invite the MFIs to reassess their code of conduct and practices for better consumer protection.
               - To put in place a conflict resolution mechanism.
               - To enhance transparency of the pricing system of MFI financial services.
               - Getting the members to own and be committed to the ethics and promoting consumer education.
- MFIs
           - To listen to the concerns and needs of clients.
           - To inform and educate clients.
           - To publish the interest rate and other costs,
           - to put in place a conflict resolution mechanism.
           - Respect for the Code of Ethics and the rules of conduct set by the Central Bank, awareness training of clients, effective and transparent management of MFI property to share different management tools.
           - Commitment to ethics and support for consumer education.
- Other
- Donors and refinancing institutions – transparency in finances
- Development partners and donors should be willing to fund.