Comprehensive List of Tools Available on the Smart Campaign Website

The following tools listed below provide a general overview of the Smart Campaign or which are broad activities that encompass more than one principle. 1. Getting Started Questionnaire 1.0 (English, Spanish, French, Portuguese, Russian, Arabic) The Getting Started Questionnaire helps microfinance institutions begin to investigate their client protection practices within their organization. Once an institution has received an introduction to the work of the campaign and client protection principles, answering this Questionnaire is the logical next step. The questionnaire is structured around the Client Protection Principles, each of which is accompanied by a list of statements about the institution's practices on that principle. The questionnaire provides a framework for evaluating a microfinance institutions practices principle by principle, focusing on the 5-10 practices that are most important for determining how effective the organizations systems are for embodying the principles. There are five categories of possible responses including: Strongly Agree, Agree, Neutral, Disagree, and Strongly Disagree. For each statement, the practitioner or assessor needs to evaluate the evidence from the MFIs policies and staff interviews and determine which category most accurately represents the institutions implementation of the statement. The second worksheet of the Getting Started Questionnaire contains graphs to help the user more easily identify strong and weak practices as well as see which principles offer the institution its best opportunity to improve its client protection activities. 2. Client Education Tools (English) In 2011, the Smart Campaigns Steering Committee launched a new Client Voice Task Force whose members represent diverse stakeholder groups throughout the microfinance industry to bring the voice of the client more squarely into the Campaign. One of the initiatives the task force identified as helpful to the microfinance industry was the development of a client protection, client education resource library. A group within the task force set out to compile a comprehensive list of existing client education materials that are in use industry wide. The following list is the start of this library. It represents tools and resources that the task force identified as models of client protection focused client education materials, chosen to help microfinance institutions communicate to their clients about their rights and responsibilities. The resources are from diverse regions and institution types, and range from radio programs, brochures, videos, to post cards. The library is still in development and will continue to expand as the task force receives permission to post resources and as new resources are identified. Resource submissions or suggestions are welcome via comments@smartcampaign.org.

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3. Client Protection Principles Training Series (English) This series of eight trainings is designed to introduce financial institutions to the Smart Campaign and the Client Protection Principles. The first presentation is an introduction to the Smart Campaign and the seven Client Protection Principles. The subsequent seven presentations discuss each of the seven principles. These presentations can be used in group training sessions in which the facilitator and presenters are physically present, or in virtual learning sessions, such as webinars. This series is intended for use by networks and MFIs as they work to train their members and employees on the importance of client protection in microfinance. -Networks can deliver the series to member institutions; in turn, member institutions can train their employees. -MFI loan officers and collections agents can use the trainings t improve their interactions with clients. -Managers can use the trainings to add a client focus to their product development and strategic planning tasks. -Regulators may find the series useful to gain insight into the latest best practices for client protection in microfinance. Each presentation can be completed in one to two hours, depending on the number of speakers and the length of participant discussions. We recommend that you implement the training series as a weekly, biweekly, or monthly program. This will allow both you and your audience to invest the time necessary to carefully prepare for each session, understand each principle, and apply the lessons learned to daily work activities. 4. Smart Note: Client Protection Good Practices in Europe and Central Asia (English, French) In 2010, the Microfinance Centre, Poland honored four of their member institutions with the MFC Excellence in Customer Protection award. The award recognized good practices in client protection at Access Bank (Azerbaijan), Adie (France), EKI Micro-credit Foundation (Bosnia and Herzegovina), and KazMicroFinance (Kazakhstan). This Smart Note examines the client protection practices of these four microfinance institutions, demonstrating how the institutions are preventing client over-indebtedness: transparently disclosing loan prices, terms, and conditions; and treating clients fairly and with respect. Microfinance institutions can use this Smart Note to generate ideas for how to improve their own client protection practices. 5. Client Protection and Ethics Codes: Examples for Getting Started (English) A number of organizations have already adopted either client protection or ethics codes and charters. The codes are generally an integral part of staff training and evaluation, and in many cases the codes are displayed in all branch offices. In some cases they are also communicated to clients as part of the loan disbursal process. 20 organizations have shared their internal codes

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with the Campaign, including: the ACCION Network, CARE, Freedom from Hunger, the Microfinance Network, Opportunity, Sa-Dahn and Ujjivan. The full list and links to their codes and charters are available on the Smart Campaign website. 6. Smart Note: Responding to a Crisis at FUNDESER (English, Portuguese) The Smart Campaigns Client Protection Principle on Fair and Respectful Treatment of Clients requires that financial service providers create a corporate culture that values high ethical standards among staff and ensures that controls exist to prevent, identify, and correct corruption or mistreatment of clients. FUNDESERs efforts in meeting this principle can serve as a good practice example to other institutions. The Smart Note, Responding to a Crisis at FUNDESER describes how the MFI dealt with the aftermath of both the worldwide credit crisis and the internal No Pay Movement (Movimiento No Pago). It explains how the institution overhauled its Human Resource department in an effort to steer the institution to recovery. FUNDESERs approach to rebuilding its brand and credibility was to make high ethical standards and sound risk management central to the institutions corporate culture. Additionally, the Smart Note shows the thought process and follow-up strategy that FUNDESRs board members and senior managers implemented. 7. Smart Lending: Client Protection in the Individual Loan Process (English, Spanish, French, Portuguese) Throughout the credit process there are points at which microfinance institutions can implement client protection practices. This guide is designed to help microfinance institutions with individual lending operations integrate good client protection practices at the intersection points throughout the credit process. At each point in the individual lending process, the guidelines explain how MFI staff should incorporate client protection into policies and operations. The guidelines are largely focused on operational issues, with brief recommendations about setting up policies for the institution. They walk the user through each major step of the individual lending process, organized into five phases: 1) Promotion and Sales, 2) Evaluation, 3) Approval, 4) Disbursement, and 5) Collections. The chart begins with an overview of the entire credit process and then provides greater detail on each of the five phases. At each appropriate step in the process, the guidelines identify where client protection practices can and should be incorporated. Each of those intersections is denoted with a client protection intervention point number (e.g. CP1, CP2 etc.). Guidelines for each CP include suggestions for how to model good practice in consumer protection for that portion of the credit process. 8. Calculating Transparent Prices Tool from MicroFinance Transparency (English, Spanish) MicroFinance Transparency offers a basic tool to help microfinance institutions understand the factors that influence the "effective interest rate" or the APR (Annual Percentage Rate). It also provides formulas used to calculate comparative costs of different loan products using a standardized approach. Microfinance institutions can use this tool for calculating their own effective interest rates, thereby demonstrating transparent for the pricing of their loan products to anyone who asks.

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9. Client Protection and the Financial Education Simulation (English) With this online tool, you can complete a simulation as if you were managers or loan officers of an MFI. During each simulation, you can see the effects that your decisions have on the success of a fictional microfinance institution.In real life, the results of decisions or actions will, of course, be less predictable. The intent of the simulation is not to propose specific actions to MFIs, but to give ideas about how client protection and financial education fit into the ongoing activities of a microfinance institution. This tool was developed as a collaborative effort among the Smart Campaign, ACCION International, and Amanda Warner, a freelance e-learning Developer for the eLearning Global Giveback Competition. We are proud that this simulation has been selected as a finalist for that competition.

10. Smart Note: Collections with Dignity at FinComn (English, Spanish, Portuguese) Appropriate Collections Practices demonstrate respect for borrowers while emphasizing the need for clients to honor their commitments to lenders. An institution shows appropriate practices when staff treat clients with dignity even when they fail to meet their repayment commitments. This Smart Note describes the steps one microfinance institution took to address rising default rates. In 2008, FinComn, a regulated MFI in Mexico, took action to combat rising default rates through the implementation of a new collections philosophy. The institutions new Collections with Dignity philosophy was designed to support clients facing the global financial crisis and improve both collections rates and portfolio quality. The new approach is based on the belief that collections agents should treat clients how they themselves would like to be treated. To accomplish this certain practices were implemented including retraining staff, creation of a series of Payment Solutions, and more personalized attention to clients. By focusing on client outcomes as well as loan recovery, FinComn was able to strengthen relationships with clients, increase on-time payments, and mitigate some of the effects of the global financial crisis on the institutions portfolio. 11. Best Practices in Collections Strategies (English, Spanish, French) ACCION International explains the collections process it employs and draws on its experiences with collections programs throughout Latin America and with new collaborations in India. In both continents the MFIs are primarily providing individual loans. Read more about the best practices that a microfinance institution should consider when attempting to successfully implement collections activities. 12. Conducting Client Protection Assessments: A Guide (English, French) This guide is designed to provide guidance to an assessor on how to conduct a consumer protection assessment for a microfinance institution and thoroughly evaluate the MFIs implementation of the client protection principles. It can either be used by microfinance institutions to assess their own performance or the assessment can be undertaken by an independent Smart-certified assessor. The guide leads the assessor through a step-by-step process of collecting the information and documents necessary to evaluate a microfinance

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institutions client protection practices as well as offering advice on how to evaluate this information against the set of indicators for each principle, which are also included. The Guide assists in: Identifying the types of documents that will need to be reviewed and the types of people who will need to be interviewed; Helping microfinance institutions analyze this documentation and evaluate their practices with respect to the Client Protection Principles; Giving recommendations on how to identify the institutions areas of opportunity for enhancing client protection; The companion "Resources" piece offers a selection of important recommendations, suggested questions, and resources for assessors. 13. Smart Savings: Client Protection in the Savings Process (English, French, Portuguese) In addition to protecting credit clients, MFIs must also protect savers. This guide is designed to help MFIs, banks, NGOs, and other types of financial institutions identify and integrate good client protection practices in the savings process at every point of interaction with the client. This document segments the savings process into five phases, each of which is comprised of at least one service point. The five phases are: (1) Promotions & Sales, (2) Application & Approval, (3) Opening & Servicing the Account, (4) Accepting Withdrawals & Paying Deposits, and (5) Closing the Account. Each of these phases is further segmented into distinct service points or points of interaction with the client. 14. Essential Documents for New Clients 2.0 (English, Spanish, Portuguese, French) The Essential Documents for New Clients refers to the set of documents that help new clients understand their full financial obligations, what they can expect from the institution, and what to do if they experience problems along the way. Institutions should provide the Essential Documents to clients prior to the first loan disbursement, and should include the following documents, at a minimum: Full loan contract Institutional pledge to clients Loan contract summary page Loan repayment schedule Welcome letter Complaints information handout Data privacy agreement full version Delinquency information Summary data privacy agreement Educational materials (optional) Using the Essential Documents for New Clients

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The following kit includes examples of each of the documents listed above, with the exception of the loan document and loan document summary (however, guidelines are provided for these documents). Financial service providers can review each of the documents in this tool when developing or improving their own new client welcome documents. A Client Welcome Kit is essential for transparent communication to new clients. It can also improve customer service, and may reduce problems that arise from clients forgetting or missing information once they go home. The documents in this tool are samples and should be adapted to the institution and reviewed by local counsel to make sure that they conform to applicable laws. 15. How to Talk to a Bank: A Brochure for Consumers (English, Russian) The fast growth of Serbias banking sector has flooded consumers with options for choosing banking services. This brochure by Procredit Bank explains to Serbian consumers how banking operations work and how to communicate with bankers. It provides information on the most important aspects of taking out a loan and on the importance of savings. Microfinance institutions can create brochures similar to Procredits to ensure that their clients know how to ask about the terms and conditions of the services that are being marketed to them. 16. Consumer Protection Library The Consumer Protection Library present country-by-country profiles of the legal and regulatory frameworks for consumer protection as well as a description of the banking associations and microfinance networks in each country. Assembled by researchers of the Center for Financial Inclusion at Accion, these profiles bring together information from other languages and diverse sources, including law, public policy, banking, and microfinance. They are not exhaustive and have not been reviewed by country experts. If you notice a gap or error in any of the profiles, we would very much appreciate your comments and/or corrections. In this way we can work together to expand our understanding of the variety of client protection strategies and initiatives that are being pursued in different parts of the world. Additional country profiles will be forthcoming. 17. Educating Clients About Client Protection: A Guide for Financial Service Providers (English, Spanish, Portuguese, French) Financial service providers and clients share the obligation of responsible provision and responsible use of financial products and services. Clients depend on providers to uphold their responsibility for client protection, and likewise, providers depend on clients to be informed users of financial services. Providers have a responsibility to avoid over-indebting clients, offer transparent and responsibly priced products, use appropriate collections practices, behave ethically at every point of contact with clients, provide a way for clients to make complaints and have them resolved, and keep client data secure. Clients should know their product options, ask questions when they need clarification, provide the institution with accurate information about themselves, and speak up about problems. Rather than making decisions for clients, financial service providers should clearly communicate important financial informationsome of which

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may be new to the clientso that clients can make good decisions on their own. Additionally, providers must enter into a conversation with clients; dialogue turns information into communication. This tool is a resource for financial service providers to talk with clients about how to be informed consumers of financial services. 18. Beyond Codes: The Foundation for Client Protection in Microfinance (English) "Beyond Codes," an action research project of the Center for Financial Inclusion at ACCION, was designed to provide a body of experience and knowledge from leading financial institutions serving low-income people about how consumer protection codes of conduct are implemented. The two-year project started in mid-2008 and ended in June 2010. The project aimed to develop the tools and experience that could inform the subsequent work in client protection by grounding it in practices of financial institutions. Twelve financial institutions (FIs) participated in the project. FIs were of various ages, from less than three to more than ten years. The institutions included banks, non-deposit finance companies, NGOs, and credit unions. Some were large operations with close to one million clients, while others were medium-sized and even small, with fewer than 10,000 customers. The countries represented in the research were: Bosnia, India, Kenya, Mexico, and the Philippines. All the FIs engaged in lending including a range of loan products using various methodologies. More than half also offered savings, transaction accounts, and insurance. 19. Smart Savings and Lending: Member Protection in SHG Model (English) This tool, Smart Saving and Lending: Member Protection in SHG Model is aimed at SHGs, Banks and NGOs (SHPIs) that want to incorporate good protection for SHG members. Since, the majority of SHG linkages with banks are based on Model II of the bank linkage program (Bank Facilitating Agency SHG Members) in this tool an attempt has been made to map the process of the SHG linkage with the bank with NGO acting as a facilitator. SHG is promoted by Government, NGOs, SHG federations and in a few cases banks also promote SHGs. In the recent years, the government has become the largest SHPI. However, for simplicity and easy understanding we assume that the SHG Bank Linkage process is divided in simple seven key phases and SHGs have only one internal and one external loan. The Campaign recognizes that there is significant diversity and complexity in the SHG Linkage Program and that the processes outlined in the tool may differ across states or regions, however, we hope that the generic process and benchmarks for member protection mapped up in this tool will be helpful for SHG Models to enhance their member protection practices within SHGs in India. Within these seven phases in the SHG process, the Campaign has identified Service Points (SPs) which are points of interaction between the member and the institution. The table below clearly maps out the phase, what happens there and the number of service points in each phase. 20. Illustrations and Activities for Training Loan Officers on Customers Rights and Responsibilities (Sahayata Micro Finance Pvt. Ltd.) (English, Spanish, French)

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As noted in Principle 4: Ethical Staff Behavior, financial service providers must foster a corporate culture that values high ethical standards among staff and ensure that safeguards are in place to prevent, detect, and correct corruption or customer mistreatment. Thorough staff training on ethical standards is required to establish such a culture, but it is also important to make sure that clients understand their rights and responsibilities as microfinance customers. Informed clients are more likely to fulfill their obligations, as well as report potential abuses by employees or other customers. In March 2011, the Smart Campaign issued a Call for Tools to the microfinance industry: Training Staff for Ethical Behavior. We asked institutions to send us examples of their staff training materials on ethical behavior. Sahayata Micro Finance Pvt. Ltd. (India) shared with the Campaign their illustrations and activities for training loan officers on customer rights and responsibilities. The "Customers' Rights and Responsibilities Illustrations" are a series of simple pictures and texts that demonstrate five client rights and five client responsibilities, each of which are aligned with the Client Protection Principles. The sets may be used for training field staff on how to inform clients of their rights and responsibilities and also may serve as visual aids for training clients. The Customers' Rights Activity is a simple, versatile tool that may be used during field staff training. Print-and-cut cards contain a one or two-sentence description of a staff members behavior towards clients. Trainees are asked to read the card and decide which customer right is supported or violated by the behavior described. The cards may be used to stimulate discussion among small groups of trainees, or they may be used to test trainees understanding of ethical behavior. The cards are easily modified to make them appropriate to specific contexts and real life scenarios. The Smart Campaign encourages institutions to download and review these documents as examples for creating simple, dynamic training tools for informing staff and clients about customer rights and responsibilities. 21. Security is the Key: Pocket Guide to Financial Security for Clients (Spanish, English, French) Finamerica provides a pocket-size brochure with tips about how to protect one's security and prevent identity theft, robberies, and other possible threats to the privacy of their personal information. 22. Smart Lending 2.0: Client Protection in the Group Lending Process (English, Spanish, French, Portuguese) This guide is designed to help MFIs incorporate good client protection practices into their group lending policies and operations. The tool is applicable to a wide range of credit methodologies and can be adapted for use by various forms of group lending including village banking methodology and group of groups methodology. The group lending process is organized into five key phases: (1) Client Recruitment & Group Preparation, (2) Evaluation, (3) Group Loan Approval, (4) Disbursement, and (5) Customer Service and Collections.

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Each of these phases is further segmented into distinct Service Pointsor points of interaction with the client. For each Service Point, the tool: Demonstrates how an MFI can model good practice in client protection in their policies and operations; Identifies which Client Protection Principles are affected; and Provides recommendations for the use of client protection tools that could help MFIs improve their client protection practices. 23. Smart Lending: Client Protection in the Group Lending Process India (English, French, Portuguese) The tool is applicable to Grameen-style group of groups credit methodology and was developed specifically for Indian MFIs. 24. Implementing the Client Protection Principles: A Technical Guide for Investors, 2nd edition (English) In September 2009, CGAP published the first edition of this technical guide for investors to support the integration of the six principles into investors policies and processes. This second edition reflects the developments in implementation and practices over the past year. Experience in putting client protection into practice is accelerating quickly. Many investors are now moving from endorsing The Smart Campaign's six Client Protection Principles to mainstreaming concrete action. This guide provides an updated set of action steps for investors, including a new due diligence tool that provides practical guidance and tips on how to assess implementation of client protection practices by retail providers. This guide also reflects on the main operational questions investors are facing, such as how to assess over-indebtedness and transparent and responsible pricing, and emerging responses. 25. Investor/Donor Planning Guide for Implementing Client Protection Initiatives (English, French) Investors and donors can use this short worksheet to plan for the integration of client protection into their due diligence processes and their funding strategies. The worksheet first guides the user through the process of assessing current resources and priorities, to take stock of where client protection efforts may best fit within current workflows. Then, the worksheet provides two tables in which several possible client protection activities and initiatives are presented. Users can fill in the tables, indicating possible activities, estimating time commitments, and laying out specific steps to accomplish the initiative. Though presented as an internal planning resource, the worksheet results can easily be shared with external stakeholders such as funders or microfinance institution clients. 26. Monitoring Individual Repayment in Group Guarantee Mechanism While the Grameen Bank has moved away from the concept of strictly implementing group guarantee mechanism, many microfinance institutions in India and Southeast Asia still

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implement the concept of joint liability, wherein if one group member defaults then the other members make payments on the members behalf. Defaults at the individual level may possibly camouflage serious issues for both defaulting clients as well as other members, and could have financial and nonfinancial implications. While stakeholders and MFIs in India recognize the importance of tracking exercise of group guarantee, there is very limited knowledge at this stage among MFIs on how to best track late payment and individual defaults within a group. Monitoring Individual Repayment in Group Guarantee Mechanism shares the experiences and discussions on how best to track the exercises of group guarantees at the individual level in the sector comparing the structured approach of MBK in Indonesia and the more informal approach Utkarsh in India. The tool demonstrates two simple approaches of monitoring the implementation of group guarantees. Both these approaches have features that can be adapted or improved based on specific requirements of stakeholders of MFIs. Using the three sub processes below, the tool maps up the actions of the MFI in monitoring the exercises of group guarantee mechanism when individual members fail to repay: 1. Tracking of individual late payments at the group level 2. Consolidation of information and analysis at MFI back end 3. MFI action at the field level 27. Microfund for Women: Client Business Evaluation Toolkit (English, Spanish, Portuguese) All financial institutions should carefully establish the borrowers ability to afford the loan and repay it. Borrowers should be able to handle debt service requirements without sacrificing their basic quality of life. Similarly, the institution takes adequate care that non-credit, financial products (such as insurance) extended to low-income clients are appropriate to their needs and means. Microfund for Women shared with the Campaign their toolkit for assessing the repayment capacity of individual borrowers. Consisting of a total of four formsincluding the loan applicationthis toolkit provides credit staff a complete profile of the health of the potential clients business, and their capacity to take on debt. Importantly, the application form requires loan officers to collect details about the clients outstanding debts and credit history. Together, these forms help the institution make quality disbursement decisions and minimize the risk of client over-indebtedness. 28. Smart Note: Implementing an Industry Code of Conduct at PMN (English, Spanish) In an increasingly competitive microfinance market, the Pakistan Microfinance Network (PMN) helps itsmembers offer the best financial services and customer service. In this effort, PMN formally launched its Consumer Protection Initiative in January 2009. The initiative centers on improving consumer protection practices through a voluntary Code of Conduct for Consumer Protection and a call center for receiving and responding to client grievances. 29. Banco Solidario: Loan Officer Training Manual (Spanish, English) Banco Solidario shared with the Campaign their Loan Officer Manual, which includes a Code of Ethics for credit staff and procedures for financial and non-financial evaluation. The Code of Ethics gives loan officers full responsibility for client capacity analysis, and the manual guides

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loan officers thorough the analysis process, including the relevant financial formulas. The manual makes it clear that Banco Solidario does not rely on collateral for determining a clients capacity to repay, but rather on careful evaluation of the clients economic and social situation. The instructions in the manual help loan officers make quality disbursement decisions and minimize the risk of client over-indebtedness.

30. Refinancing Policy of FUBODE (English, Spanish) After participating in a Smart assessment, FUBODE (Fundacin Boliviana para el Desarrollo) worked closely with the Smart Campaign in an upgrading project to improve areas of its business practices and more closely adhere to specific client protection indicators. One document that called our attention was FUBODEs rescheduling and refinancing policy, one that many MFIs lack. FUBODE Kindly agreed to share their policy with the industry so as to foment best practices. This document should be used as a starting point for any MFI who wants to improve their restructuring and rescheduling policies as per the Smart Campaign Principles. 31. Smart Note: Supporting Members to Adopt Client Protection at Azerbaijan Microfinance Association (AMFA) (English, Portuguese) Microfinance networks and associations have a unique role to play in the industrys adoption of client protection practices. Networks and associations bring client protection information to their members; provide support, training, and technical assistance for the implementation of client protection activities; create industry Codes of Conduct; and lobby and counsel regulators on client protection initiatives, among other important contributions. Established in 2001, the Azerbaijan Microfinance Association (AMFA) champions client protection among their 28 member organizations. As a part of their larger social performance management (SPM) strategy, AMFA supports members in the adoption of the Client Protection Principles. AMFA shared with the Smart Campaign why client protection is a priority for the association, and how they encourage strong client protection practices in the Azerbaijani microfinance industry. Their client protection initiatives can serve as good practice to other networks and associations. 32. Smart Microinsurance: An Overview for Microfinance Institutions on Incorporating Client Protection Practices into Microinsurance (English, Spanish, French, Portuguese) The Smart Campaign and the Microinsurance Network present Smart Microinsurance a tool designed specifically for MFIs that serve as intermediaries, offering microinsurance products provided by an external assistance company. The tool outlines key client protection guidelines for the following phases of the microinsurance process: Introducing the client to microinsurance

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Collecting and protecting client information Activating the insurance policy Collecting premiums & ongoing customer service Responding to claims

It also provides: guidelines for appropriate product design; guidelines for partnering with other service providers; and social performance ratios for evaluating the effect of microinsurance on clients. 33. Smart Operations: A Guide for Financial Institutions on Incorporating Client Protection Practices into Institutional Operational Areas (English, French, Spanish) Financial institutions (FIs) must involve employees from every operational area in an effort to achieve adequate client protection. Rather than designating client protection as a special project to select employees, FIs should ensure that each department has specific client protection responsibilities. This tool suggests appropriate roles for 11 of the most common areas of microfinance operations. FIs can use this tool to assign client protection responsibilities to each operational department and to understand how responsibilities are shared among operational departments. Specifically, an institution can use the tool to: Evaluate and make changes to a single department. For example, the institution might identify Human Resources as a priority department, and use the tool to improve the client protection practices of that department. The institution can return to the tool each time it is ready to evaluate and improve a new operational area. Evaluate the entire institution. A single person, such as the Executive Director, or a team, such as the Board of Directors, may use the tool to evaluate how each department functions in relation to the guidelines presented in the tool, and to create a strategy for making institutional changes. The tool can be useful in setting such a strategy, including: o Identifying priority operational areas for improvement. o Identifying priority Client Protection Principles for improvement. Understand how different operational areas share client protection responsibilities. Institutions can use the cross references to understand how changes to a policy or practice in one operational area both rely on and support changes in another operational area. For example, an institution might learn how improvements to Product Research and Development are dependent on, and essential to, improvements in Product Management. This understanding will facilitate the process of improving client protection practices across the institution. The 11 operational areas discussed in this tool include: 1. Executive Management 2. Product Research and Development 3. Product Management 4. Human Resources 5. Marketing and Promotions 6. Sales Force and Frontline Employees

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7. 8. 9. 10. 11.

Finance Risk Management Legal Information Technology and Communications (ICT) Complaints/Customer Service

34. Loan Agreement for Small Business Clients (JSC MFO Crystal) (English) This contract is used with clients seeking small businesses credit. The contract is succinct, written in plain language, and uses very little jargon. It details loan terms, fees, and penalties, and importantly, spells out the rights and responsibilities of both parties. Clause 5.10, The Lender takes responsibility to provide Borrower with full and clear information on the loanincluding all potential fees and changes is particularly important for transparency. The contract includes an amortization schedule that separates principal, interest, and fees, and defines the amount, number, and due dates of installment payments. Finally, the contract states that the client shall receive a copy of the signed document, an important factor in ensuring transparency with the client. The Smart Campaign encourages institutions to download and review this document, and to use it as a good practice example for creating or improving their own loan contracts. This PDF document includes annotations that highlight several of the most important aspects of the loan contract. Simply click on the yellow note boxes to reveal the notes.

35. Loan Contract Summary Handout (Mibanco) (English, Spanish, Portuguese) The Smart Campaign encourages institutions to download and review this document, and to use it as a good practice example for creating or improving their own loan contract summaries. The PDF document includes annotations that highlight several of the most important aspects of the loan contract. Simply click on the yellow note boxes to reveal the notes. 36. Due Diligence Checklist for Investors (English) The Consultative Group to Assist the Poor (CGAP), a consortium of 33 public and private development agencies working together to expand access to financial services in developing countries, has taken the lead within the Smart Campaign in reaching out to investors and donors, urging them to join together to integrate the Client Protection Principles into their internal systems and processes. This Checklist for Investors is the product of fruitful collaboration between CGAP, the Smart Campaign, and many investors. It draws on current investor practice and experience. Many investors are designing, testing, and refining criteria and procedures for incorporating the Client Protection Principles into screening and due diligence. This due diligence checklist draws on peer learning from the initiatives. The checklist is comprised of 12 key questions that can be added to investors current due diligence processes. For each question, the checklist provides good practices as well as practices that should signal caution to the investor. Finally, a substantial Annex answers frequently asked questions from investors, such as How do you

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really know about the level of client over-indebtedness until the bubble bursts? and What kind of behavior do loan officer incentive bonuses really promote? This checklist is not designed as a standalone due diligence tool. Instead, it is designed to lower transaction costs by presenting questions to add to common due diligence topics. The checklist is primarily for investors and funders of retail financial institutions. But others, such as investors considering participating in microfinance investment vehicles (MIVs) and grant funders of apex organizations, can use this tool to ensure that these funds review client protection practices as part of their own screening procedures. Investors may consider requiring use of the checklist as a condition for their participation in the fund. Investors who outsource their due diligence function can include these topics in the due diligence teams terms of reference. While developed for microfinance, the checklist is appropriate for those who invest in any retail financial institution, particularly consumer finance companies. This checklist is a companion to CGAPs Implementing the Client Protection Principles: A Technical Guide for Investors, 2nd edition, also available on the Smart Campaign website. 37. Implementing Client Protection in Microfinance: State of the Practice, 2011 (English, Spanish) "Implementing Client Protection in Microfinance: State of the Practice, 2011" is a mid-term report by the Smart Campaign, commissioned by its Steering Committee. The report has two main purposes. The first is to explain how the Smart Campaign and actors throughout the microfinance industry are working to move from initial awareness raising about client protection to capacity building, implementation, and finally certification. The second purpose is to provide a first look at how the microfinance industry is doing on the Client Protection Principles (CPPs). That look is based on 479 third-party assessments of client protection practices at more than 300 microfinance institutions (MFIs) in five global regions. The assessments were conducted by leading microfinance-focused investors, microfinance rating agencies, and, most recently, by the Smart Campaign itself. The report draws on three main types of data: The first type is a set of specific examples of client protection practices of MFIs around the world. These mini case studies, interspersed in boxes throughout the paper, are sourced mainly from Smart Campaign assessments, particularly examples where organizations decided to make changes based on findings during the assessment process. The second type involves two streams of self-reported data submitted by MFIs.
MIX Social Performance Reports (350 in the latest year available on the MIX, 2009). The

client protection portion of the MIX social performance report is a shortened form of the Smart Campaigns "Getting Started Questionnaire." The Smart Campaigns Getting Started Questionnaire (98 submitted to the Smart Campaign in 2011). This 42-question checklist helps MFIs assess their own practices as a way to identify areas they may wish to improve.

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The third type is third-party assessment data, the CPP Benchmarks 0.1. This dataset was put together specifically for this paper, and comprises third-party on-site evaluations drawn from multiple sources. The Smart campaign anticipates a follow-up to this report in the next one to two years. We encourage feedback and collaboration from the industry in future reviews. Please share your comments, experiences, challenges, etc. around implementing the CPPs by sending us an email at: comments@smartcampaign.org. 38. Study of Client Protection Practices in Latin America and the Caribbean (English, Spanish) The Smart Campaign conducted a study on the client protection practices of 12 microfinance institutions in Latin America and the Caribbean (LAC). This study looked at an assortment of organizations such as NGOs, banks, and credit unions in different countries, analyzing their client protection performance from the point of view of practitioners, offering recommendations to improve their client protection practices. The findings in this Study of Practices in LAC are intended to help stakeholders reflect on the current state of practice among microfinance institutions in LAC and how performance gaps can be addressed. Overall, the MFIs studied in the report performed well in the principles of Preventing OverIndebtedness, Responsible Pricing, and Ethical Staff Behavior, but there is (sometimes significant) room for improvement in the principles of Transparency, Appropriate Collections, and Mechanisms for Complaint Resolution. This report revealed that client protection performance is not easily generalized and improvement in certain principles is needed to meet the standards laid out. We believe that reaching the Campaigns standards of care in client protection across all seven principles is a possible objective for most organizations to achieve, provided enough time and dedication. Ultimately implementing the principles will strengthen institutions and improve client well-being. 39. Implementing Client Protection in Indian Microfinance This State of Practice Report represents an important step in understanding the state of client protection practices today in India, three years after the Andhra Pradesh crisis and two years after the Smart Campaign began its deep engagement with the sector. Results in this report are drawn from the activities conducted under the project that was implemented from June 2011 to November 2013. The report aspires to deepen the publics understanding of how microfinance institutions can put the client protection principles into practice in India and where the industry is in terms of strengths and weaknesses. Simultaneously, the report provides an overview of the level of effort made by MFIs to improve practices through participation in training and subsequent selfassessments. The report also showcases some of the extraordinary efforts and commitments made by microfinance institutions to improve their practices through upgrading projects.

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The project work streams represent the natural progression of institutional improvement from endorsement, to building understanding of client protection issues, to assessing and improving performance to externally validating performance. 40. Client Protection for Youth Clients (UNCDF YouthStart Technical Note) (English) This technical note is intended to assist Financial Service Providers currently serving youth, planning to serve youth, or making improvements to existing services to do so in a way that ensures that youth are protected. The technical note synthesizes adaptations made by UNCDF YouthStart to the indicators of the Smart Campaigns Client Protection Principles (CPPs) selfassessment tool and draws on the Child and Youth Finance International (CYFI). This technical note is designed to support FSPs to address the particular characteristics, needs and vulnerabilities of their youth clients. In addition to highlighting specific areas of the Client Protection Principles where youth are more at risk, UNCDF - YouthStart highlighted new areas that need to be taken into consideration in order to address the key standards of the Child- and Youth-Friendly Banking Certificate. 41. Smart Note: Balanced Performance Review of Managing Director at Cashpor (English) This Smart Note demonstrates the practices at one such institution, Cashpor Micro Credit (CMC), who has successfully implemented an annual performance review system which balances business growth while keeping the institutions mission and vision at the heart of the system. Cashpor Micro Credit (CMC) operates in Indias poorest regions of Eastern Uttar Pradesh (UP) and Western Bihar and is one of Indias top ten MFIs in terms of loan outstanding and client base. The Cashpor group commenced its microfinance program in 1996, and is a registered Section 25 company (Not For Profit Company). The institution is a brainchild of Prof. David Gibbons, a practicing academic who continues to serves as the Chairman of the Board. 42. Client Protection in the Business Correspondent (BC) Model (English) The main objective of this tool is to identify and discuss the client protection issues that are applicable for the credit-led and savings-led deployments and share the good practices that organizations follow around client protection. The good practices shared can help and guide organizations currently involved in BC operations to adopt them for reducing risks for the clients and the organizations themselves. While the BC model has reached a certain scale and is still growing, there are several challenges around emerging operational risks. The client protection issues gain significant importance, considering the target client segments this model predominantly targets, that is the low income households who are mostly: semi-literate or illiterate not familiar with use of technology excluded from the formal banking sectors Not addressing client protection issues have implications on: List Updated 2/2014

the financial inclusion agenda uptake of the products and service as low trust in service can impede the service takeup business case for agents and for the sector as a whole as low take up of services affects the business case for agents

Increasing number of deployments, clients and agents make it imperative to focus on putting in mechanisms in place that protect the clients, agents and the bank as such from mitigating risks perspective. 43. SPTF: Universal Standards Implementation Example How Bandhan Trains and Evaluates Credit Staff (English) This case study demonstrates how Bandhan Financial Services Pvt. Ltd. implements Essential Practices from Dimension 5 (Treat Employees Responsibly) of the Universal Standards for SPM. Other financial service providers can use this example to improve their own Human Resources policies and practices. This case study highlights the implementation of the following Essential Practices: Essential Practices 5b.2: Each employee receives job-specific training and/or skill development necessary to perform his/her essential job functions. Essential Practices 5b.3: Each employee understands how his/her performance will be evaluated and rewarded by the institution.

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Principle 1: Appropriate Product Design and Delivery 1. Smart Note: Designing Products based on Customer Requirements: Unique Approaches of SEWA bank and IFMR (KGFS model), India (English) The need to develop flexible and responsible financial products constitutes perhaps the most compelling challenge facing the microfinance industry today in India, as well as globally. Currently, given the regulatory constraints in India and the mono type of product offering, the gap between products and client needs is obvious. But, what does it take to remove these imperfections? Designing of product is influenced by multiple factors and can be quite complex. In India, delivering more client-responsive financial services to a broader segment of the population requires some changes. So what works for microfinance institutions that have succeeded in designing products is that they take into consideration client characteristics and focus on no harm to clients. This tool documents and presents two distinct, but successful approaches of SEWA Bank and IFMR in understanding client (member) requirements and designing products that meet their requirements. It explores how the philosophy of an institution affects its product offering and what are the approaches adopted by SEWA Bank and IFMR (KGFS Model) in understanding their members financial requirements. 2. Smart Note: Collections With Dignity at FinComn (English, Spanish) In 2008, while facing rising default rates, FinComn implemented a new collections philosophy in order to support clients facing the global financial crisis and combat rising default rates. The new philosophy, Collections with Dignity, is based on the belief that collections agents should treat clients how they themselves would like to be treated. By focusing on client outcomes as well as loan recovery, FinComn was able to strengthen relationships with clients, increase on-time payments, and mitigate some of the effects of the global financial crisis on the institutions portfolio.

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Principle 2: Prevention of Overindebtedness 1. The Consumers Guide to Debt Management (English, Spanish) The National Credit Regulator (NCR) of South Africa publishes a debt management guide that is available to all South Africans, called Take Control of Your Finances. The guide provides basic information about how to identify over-indebtedness, tips on how to avoid and deal with overindebtedness, consumers rights, how to access a debt counselor and tips on how to avoid and deal with money-scams, repossessions and surrenders (voluntary repossessions). 2. Smart Note: Facing Over-Indebtedness at Partner Microcredit (Spanish, French, Portuguese) Lending in a highly competitive microcredit market, Partner Microcredit Foundation avoids client over-indebtedness by recognizing that a risk for the client is a risk for the institution. To mitigate these risks, Partner performs rigorous credit analysis of its clients before issuing a loan and follows up with audits to verify proper staff behavior and discover why clients are not able to meet their obligations. Proactive measures like financial-literacy programs and client-loyalty efforts complement analysis and audits to create a robust system to avoid client overindebtedness. 3. Over-indebtedness of Microborrowers in Ghana (English, Spanish, Portuguese) Providing access to finance for those excluded from the formal financial system was and still is the mission of microfinance. What has changed, however, are the main challenges on the way to success. In the past, the financial sustainability of the service was the main hurdle to be cleared. Today, responsibility in service provision claims more of our attention. This is because something has happened that seemed virtually impossible only a few years back. In some parts of the world where microfinance services have expanded rapidly, the problem is no longer too little access to finance, but too much. A phenomenon that has previously been known exclusively in industrialized countries has reached the developing world: overindebtedness. Over-indebtedness has to be taken very seriously, particularly since in many countries where microfinance operates, customer protection and social safety nets are not well developed. Accordingly, a customer with an unsustainable debt burden cannot file for insolvency and expect official procedures to pave the way to a fresh start. Few debt counseling agencies exist, and in most places there is not social security system to provide a subsistence income for the family if a microfinance client fails. In a nutshell, when a microfinance client becomes overindebted, she is on her own. This is why microfinance institutions carry all the more responsibility to protect their customers. These institutions have a social mission to assist their customers in improving their lives through access to financial servicesprovided in a responsible way. To give guidance on how to live up to the standard of responsible finance, the Smart Campaign (www.smarcampaign.org) developed the Client Protection Principles with widespread industry participation. Prevention of over-indebtedness is one of these principles. Undoubtedly, most leading MFIs are firmly

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committed to this principle, as evidenced by the fact that the overwhelming majority of the MIX 500 largest MFIs have endorsed the Smart Campaign. However, commitment is not sufficient to put a principle into practice. This is especially true when there are large knowledge gaps, as is the case with over-indebtedness. This report by Jessica Schicks, Over-indebtedness of Microborrowers in Ghana, makes an important contribution to depending knowledge on this elusive topic. 4. Avoidance of Over-indebtedness: Guidelines for Financial and Non-financial Evaluation (English, French, Spanish, Portuguese) Avoidance of Over-indebtedness: Guidelines for Financial and Non-financial Evaluation is a tool for financial service providers that want to incorporate good client protection practices into their evaluation processes for individual loan clients. Specifically, the tool provides guidelines for determining a loan applicants capacity and willingness to repay a loan. A careful evaluation process is critical to avoiding client over-indebtedness, the situation in which a client cannot repay a loan without sacrificing his or her quality of life. Financial service providers have a responsibility to actively prevent client over-indebtedness. The tool is divided into three parts: I. Overview of the Individual Credit Process: The Smart Campaigns Smart Lending tool provides details on how to apply the Client Protection Principles at each step in the individual lending process. This section summarizes that tool and demonstrates how it interacts with this tool. II. Collecting Financial and Non-financial Data: Collecting sufficient data on loan applicants reduces the risk of client over-indebtedness resulting from loans that clients are unable to pay, or loans to clients who are unwilling to pay. This section describes database research and data collection. For each step in the data collection process, the tool outlines: 1) The institutions objective, 2) Client protection guidelines for the institution, 3) Additional process guidance for the institution, and 4) Related evaluation forms. III. Evaluating Financial and Non-financial Data: After collecting client information, institutions must carefully evaluate client creditworthiness and debt capacity. This section provides guidelines for: 1. Financial and ratio analysisprovides ratios and guidelines for evaluating a clients business and household 2. Non-financial analysisprovides non-financial indicators and guidelines for interpretation 3. Development of the loan proposalprovides guidelines for setting the installment amount, loan amount, loan term, and repayment frequency 5. KazMicroFinance: How to Assess Client Business (English) KazMicroFinance shared with the Campaign their PowerPoint training for loan officers, How to Assess Client Businesses. This short presentation trains loan officers in how to thoroughly evaluate a potential client. Loan officers are required to visit the clients business location and meet with the guarantor. During the visit, the loan officer completes four forms: balance sheet, income statement, cash flow analysis, and cross-check analysis (verification of the viability of the

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business from sources other than the business owner). These measures help loan officers make quality disbursement decisions and minimize the risk of client over-indebtedness. 6. Opportunity Bank Serbia: Loan Calculator (English, Serbian) Opportunity Bank Serbia shared with the Campaign their Loan Calculator Toolkit for determining the appropriate loan size for a potential client. Based heavily on information gathered from the national credit bureau, this Excel-based tool requires a thorough evaluation of the clients business, family income, and existing debt. Loan officers answer the required questions, and the tool automatically calculates the clients risk profile, according to the standards set by the bank. This calculation helps loan officers make quality disbursement decisions and minimize the risk of client over-indebtedness. 7. Client Profile Tool Debt Threshold Calculator (English)

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Principle 3: Transparency 1. Transparency in Promotions and Sales: A Checklist for Financial Service Providers (English, French, Spanish, Portuguese) Financial service providers must fully disclose to clients the prices, terms, and conditions of their financial services. Transparency protects clients by allowing them to make financial decisions based on full and accurate information. However, full disclosure is not enoughfinancial service providers must provide complete information in a form that is understandable to clients. This includes using plain language that does not mislead or confuse clients, using multiple methods to disclose information, and using materials and communications methods appropriate to clients financial literacy. Financial service providers should observe the principle of transparency at every point of interaction with the client, from promotions, to loan disbursement, to repayment, to account closing. This tool focuses on the first point of contact with the clientthe initial sales pitch. Financial service providers can use this tool to improve transparency when promoting and selling credit and savings products. The tool contains five good practice checklists: I. A checklist of communication dos and don'ts that apply to all interactions with clients during the promotions and sales process II. A checklist for transparency when selling individual loans III. A checklist for transparency when selling group loans IV. A checklist for transparency when promoting savings products V. A checklist for transparency when selling products to clients with extra needs Managers should examine the tool to determine which elements apply to their institution. Then, managers should review the tool with sales staff and discuss how to apply the checklists to staff interactions with clients. The Smart Campaign encourages financial service providers to adapt the tool to their particular products and sales techniques. 2. Putting Transparency Into Practice: Communicating about Pricing (English) When clients have complete information about product options, they are equipped to decide which products are best for them and to accept the consequences of their decisions. Transparency encourages open communication and a supportive relationship between providers and clients. To meet this principle, financial service providers will communicate clear, sufficient, and timely information in a manner that clients can understand. Specifically, providers will offer: DisclosureThe following information is disclosed to the client, prior to sale: A) Prices, terms and conditions of all financial products,1 B) Annualized interest rate (APR) or effective interest rate (EIR) calculation formulae, as determined by truth-in-lending laws,2 C) An amortization schedule,3 and C) Debt collections practices. Staff trainingStaff are trained to communicate effectively with all customers, ensuring that they understand the product, contract terms, and their rights and obligations.

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Communications techniques address literacy limitations and make use of the language(s) understood by clients. Variety of disclosure mechanismsProviders use multiple channels for disclosing product information, such as brochures, orientation sessions, posting information in the branch, etc. Adequate time for client reviewClients are given sufficient time to examine the terms and conditions of the product and have an opportunity to ask questions prior to signing contracts. Accurate and timely account informationClients regularly receive clear and accurate information regarding their accounts (e.g., account statements, receipts, balance inquiries).

3. Smart Note: Transparent and Responsible Pricing at Mi-Bospo (English, French) The Bosnian MFI Mi-Bospo focuses on client protection to safeguard both the institution and clients. For Mi-Bospo, transparency and responsible prices are key elements of ensuring client satisfaction. The MFI ensures transparency by screening potential hires, adhering to strict marketing guidelines, and taking time during the loan process to be sure that clients understand their rights and responsibilities. Mi-Bospo offers responsible pricing by carefully analyzing their clients businesses to determine the interest rates they can afford to repay. Additionally, Mi-Bospo regularly compares their prices to those of similar competitors, to make sure they remain competitive in the local market. Finally, Mi-Bospo carefully monitors operating expenses to keep them low, but has found that staff salaries must remain competitive to ensure staff loyalty and retention, both of which help Mi-Bospo better serve clients. 4. AMFIU Transparency in the Ugandan Microfinance Market (English) Many people define or explain transparency in many ways. Some term it as being open, accountable, honest, truthful and trustful. The Chief Executive Officer of Mid North Private Sector Promotion Center explained it precisely as seeing through a glass. Transparency is either of the above and it is crucial for any contractual arrangement. Transparency begins with us, our spouses in our homes, families and our institutions/ organizations that we serve. It touches every segment of our daily lives and is key if trust is to be sustained in any arrangement.

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Principle 4: Responsible Pricing 1. Responsible Pricing: The State of Practice (English, Spanish, French) In December 2009, the Smart Campaign amended its Client Protection Principles, Transparent Pricing to become Transparent and Responsible Pricing. The principle states that pricing should be both affordable to clients and sustainable for financial institutions. This formulation emphasizes that low prices are good for clients, while allowing for the practical realites entailed in the provision of small loans and low-value savings accounts. In amending the principle, the Campaign affirms the importance of responsible pricing while recognizing that the current state of the practice does not now provide clear guidance or standards to define it. In order to move in the direction of clearer guidance, the Campaign prepared this discussion paper. It examines the full range of approaches to responsible pricing of loans, from promoting competition, to return on equity limitations, to interest rate caps to comparative transparency. These approaches are discussed in the context of the cost curves developed by MicroFinance Transparency, which plot detailed information on pricing, terms and conditions among all the (participating) lenders in a country. Among the most important messages to emerge from the MicroFinance Transparency data are: Pricing and the cost structures that determine it vary widely from one country to the next. It makes sense to judge institutions in their country setting against their competitors. Small loans require higher and sometimes surprisingly much higher interest rates and fees. This argues against interest rate or price caps, which penalize institutions attempting to reach harder-to-serve clients such as poorer people. Analysis of individual providers should account for factors such as outreach to (more costly) rural areas, provision of non-financial services, high profits for inefficiency. All of these factors contribute to a final determination of whether pricing is responsible.

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Principle 5: Fair and Respectful Treatment of Clients 1. How to Develop an Institutional Code of Ethics (Spanish, French) This guide is intended to assist microfinance institutions in writing a code of ethics and/or conduct. Institutional ethics directly influence the image and reputation that employees, partners, customers and the community have of an institution. A code of ethics and/or conduct is a useful tool to "transmit" the values, principles and vision of the mission and Institution. In practice, codes can also be used as a basis for staff re-testing or periodic recertification and provide a standard from which to measure success. 2. Smart Note: Building Institutional Culture Around a Code of Ethics at Compartamos (English, Spanish, French) In 2004 Compartamos Banco established a formal Code of Ethics, built around a set of six institutional values, including Responsibility, Passion, Profitability, Teamwork, and Service. At the core of these values is the Person and the idea that each person, whether an employee or a client, is valuable to an integrated whole. Shortly after establishing a code of ethics, Compartamos created a department to review, monitor, and institutionalize the code throughout the institution. As a result, the banks emphasis on ethical behavior is evident throughout the institution. 3. Collections Guidelines for Financial Service Providers (English, Spanish, Portuguese, French) Financial service providers must treat clients with respect and dignity at all times, even when clients fail to meet their contractual commitments. Collections Guidelines for Financial Service Providers is a checklist for institutions to assess their collections policies and practices, with the goal of strengthening client protection during the collections process. The tool addresses collections policies, practices, manuals, and training of field staff. For each of these topics, an institution can compare good practice with its own practice, and identify areas for improvement. With this information, institutions can develop an action plan addressing weaknesses. During this effort, financial service providers may want to access other Smart Campaign resources for improving collections practices, found on the Smart Campaign website. Beyond checklists for assessing practices, the tool provides a discussion guide for training staff on appropriate collectionsincluding two group exercises for field staff. This section is important for helping staff understand how to use the institutions collections policies in their daily work, including handling difficult clients and ethical dilemmas. 4. Code of Conduct E-Learning Module (Grameen Financial Services Pvt. Ltd.) (English) As noted in Principle 4: Ethical Staff Behavior, financial service providers must foster a corporate culture that values high ethical standards among staff and ensure that safeguards are in place to prevent, detect, and correct corruption or customer mistreatment. A critical step towards establishing such a corporate culture is ensuring that each employee clearly understands the institutional Code of Conduct and how it is applied in client interactions.

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In March 2011, the Smart Campaign issued a Call for Tools to the microfinance industry: Training Staff for Ethical Behavior. We asked institutions to send us examples of their staff training materials on ethical behavior, including materials used to test staff knowledge of ethics. 5. Fonkoze: Guide for Credit Agents Evaluating Clients for Fonkozes Post-Disaster Recovery Program (English, Haitian Creole, Spanish, Portuguese) Fonkoze shared with the Campaign their Guide for Credit Agents: Evaluating Clients for Fonkozes Post-Disaster Recovery Program, which guides credit agents in disbursing credit in a post-disaster environmenta time when microfinance clients are particularly vulnerable to over-indebtedness. The guide instructs credit agents to evaluate the different factors that affect a clients ability to take on debt after a disaster, including their business, living situation, and wellbeing (mental and physical). Additionally, the guide instructs loan officers to make credit decisions in collaboration with the center chief and group leader (client leadership), who know the client best. These measures help loan officers make quality disbursement decisions and minimize the risk of client over-indebtedness. 6. Smart Note: Ethical Staff Behavior at Alalay Sa kaunlaran, Inc. (ASKI) (English, Spanish, French) With limited financial resources and few service options, microfinance clients are particularly vulnerable to corruption and unscrupulous business practices. The principle of ethical staff behaviour aims to ensure that financial service providers maintain high ethical standards in their interactions with microfinance clients. Adequate safeguards must be in place to detect and correct corruption from staff or mistreatment of clients. Developing and maintaining an ethical corporate culture requires that an organization clearly state its values and ethical standards through a code of conduct. Management and staff at all institutional levels must be trained in ethical behavior and receive appropriate rewards and sanctions for their ability or failure to comply. Alalay Sa Kaunlaran, Inc. (ASKI), a microfinance institution in the Philippines, believes that ethical staff behavior is a critical component of good customer service and human resources management. ASKI implements their written Code of Conduct and Discipline through staff training, staff performance reviews, client satisfaction surveys, and the ASKI Values Protocol an established process for addressing staff violations of the code. In addition, clients can provide instant feedback on staff behavior by sending text messages directly to ASKI. These measures help the institution maintain an ethical corporate culture. 7. Code of Conduct for Collections and Collections Practices for Group Loans at Swadhaar FinServe Pvt. Ltd. (English, French, Portuguese) Institutions that observe the principle of Appropriate Collections Practices treat clients with dignity even when clients do not meet their contractual obligations. Swadhaar FinServe Pvt. Ltd. shared their Code of Conduct for Collections and their Collections Practices for Group Loans with the Campaign, both of which provide collections staff with specific guidelines and procedures for treating clients with dignity during the collections process. 8. Smart Note: Hiring Staff with Disabilities at AccessBank, Azerbaijan (English, Spanish, Portuguese) List Updated 2/2014

In 2010, the Microfinance Centre, Poland honored four of their member institutions with the MFC Excellence in Customer Protection award. The award recognized good practices in client protection at Access Bank (Azerbaijan), Adie (France), EKI Micro-credit Foundation (Bosnia and Herzegovina), and KazMicroFinance (Kazakhstan). This Smart Note examines the client protection practices of these four microfinance institutions, demonstrating how the institutions are preventing client over-indebtedness: transparently disclosing loan prices, terms, and conditions; and treating clients fairly and with respect. Microfinance institutions can use this Smart Note to generate ideas for how to improve their own client protection practices. 9. Smart Note: Treating Clients with Respect at Fundacin Mundo Mujer Popayn (Spanish, English, French) Treating clients with dignity and respect helps financial service providers adhere to both their social mission and financial goals. It is a win-win the client is satisfied and the provider gains the clients loyalty and continued business. This dual advantage can motivate providers to improve their policies and procedures governing staff-client relations, including collections practices, ethical standards, complaints mechanisms, and staff training. The Smart Note describes how Fundacin Mundo Mujer Popayn developed a stronger proclient attitude. The institution took time to listen to clients, collected their feedback and suggestions, and used this information as guiding principles for developing new policies and procedures. The result is a set of complementary policies that unlike previous material use specific problem situations to address potential weaknesses in client protection practices. 10. Responsible Treatment of Clients: Practicing Non-discrimination (English, Spanish, French) Financial service providers should treat clients (including potential clients) with honesty, fairness, and respect. The Smart Campaigns Client Protection Principle on Fair and Respectful Treatment of Clients states: Financial service providers and their agents will treat their clients fairly and respectfully. They will not discriminate. Most financial service providers intent to treat clients responsibly and do not intentionally discriminate against clients based on personal characteristics (gender, race/ethnicity, disability, sexual orientation) or affiliations (religion, politics). At the same time, few institutions check their policies and behaviors for discriminatory practices. Greater intentionality is needed to ensure that all clients are treated with respect. The tool provides financial service providers with insight into the difference between client targeting and harmful discrimination and illuminates examples of common forms of discrimination. Finally, the tool provides financial service providers with seven action steps to correct and prevent discrimination. 11. Codes of Conduct and the Role of Microfinance Associations in Client Protection (English)

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Microfinance associations have an important role to play in promoting codes of conduct as a means of self-regulation in the microfinance industry. As part of a series of tools on the "3C's" of responsible finance (Credit Bureaus, Codes of Conduct, and Clients' Complaints system), the SEEP Network presents "Codes of Conduct and the Role of Microfinance Associations in Client Protection." The technical note explores the variety of reasons why and how associations may choose to adopt and promote self-regulation through a Code of Ethics or Code of Conduct. In the note, three case examples illustrate different approaches taken by associations in India, Pakistan, and Mexico. 12. Nondiscrimination Policy of Fundacin Paraguaya (Spanish, English) As noted in Principle 5, Fair and Respectful Treatment of Clients, financial services providers and their agents will treat their clients fairly and respectfully and will not discriminate. This is an area in which Fundacin Paraguaya, an MFI, demonstrates prolific commitment. With a comprehensive non-discrimination policy composed of ten standards, Fundacin Paraguaya enforces that every employee, official, and client respect and obey its policy to foster an equal and productive environment for all. Fundacin Paraguaya does not discriminate based on abilities, gender, age, religion, ethnicity, sexual orientation, or political affinities. Fundacin Paraguaya has shared its non-discrimination policy, which makes part of their Code of Ethics, with the Smart Campaign to be used as a tool for other institutions to emulate as they strive to implement non-discrimination policies of their own. 13. Tamweelcom Data Repository Form (English) 14. Tamweelcom Incoming Calls (English)

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Principle 6: Privacy of Client Data

1. Smart Note: Customized IT at Caja Morelia Safeguards Client Data (English, Spanish, Portuguese) Privacy of client information requires both high quality data security protocols and diligence in maintaining the confidentiality of client information. Upon transforming to a regulated financial services provider, Caja Morelia needed to meet federal data management and reporting requirements. Faced with these new technology needs, Caja invested in a data management system and supporting processes to provide superior data security. 2. Data Privacy in India (English) To enhance sector knowledge on the Data Privacy principle Smart Campaign has developed this tool to present various illustration about what can go wrong if proper policies and procedures are not followed. Each of the illustrations presented in this tool are based on the experiences of real Indian MFIs, who have suffered from weaknesses in their data privacy practices or real threats faced by them in case they do not make quick changes . Though the names of the MFIs and clients are fictional, the illustrations highlight real issues. The illustrations focus on lack of written policy and active communication with clients, identity theft of clients for procuring unsolicited advantages like state offered subsidies, purchase of mobile SIM card and further create internal fraud by creating ghost clients based on clients Know Your Customer (KYC) documents. Illustrations also discuss misrepresentation of client information to seek institutional benefits in the form of soft funds and unauthorized use of client personal information and photos in marketing and communication purposes. 3. Smart Note: Protecting Client Data at Fundacin Delamujer (English, Spanish) This tool shows an interview between the Smart Campaign and Juan Manuel Grau, the Director of Social Development at Fundacin Delamujer about the measure this institution has taken to ensure that its data on clients remains private and secure. Fundacin Delamujer is a Colombian NGO and affiliate of Womens World Banking that has emphasized protection of client data in recent years. Viewing client data as a valuable institutional asset, Fundacin Delamujer has upgraded its systems, policies and procedures to ensure the security of client and institutional data. At the same time, the institution implements ongoing staff training and awareness campaigns to create a security culture at all levels of the institution.

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Principle 7: Mechanisms for Complaint Resolution 1. Complaints-Handling Manual (Tamweelcom) (English, Spanish, Portuguese) Tamweelcom in Jordan has provided the Campaign with their Complaints Handling Manual, which contains detailed scripts of telephone interactions with clients, a flow chart of the complaints process within the institution, as well as their internal forms to be filled out by both clients and staff when a complaint is lodged. This tool will give MFIs a good example of what types of forms and follow up are necessary to keep track of complaints and their resolution. Complaints-Analysis Spreadsheet (Fundacion Delamujer) (English, Spanish, Portuguese) All MFIs should have in place processes for receiving and handling client complaints. MFIs need to have clear processes that detail how staff should interact with clients and how complaints should be handled. They should have appropriate forms for both clients and staff in order to make clients know that their complaints are taken seriously and there will be follow-up. Additionally, it is important for MFIs to have clear processes that detail who will respond to clients complaints and the appropriate times to do so. Fundacion Delamujer has shared with the Campaign their complaints analysis spreadsheet for monitoring and classifying complaints. It is intended to divide complaints according to their importance, type, and branch. This allows the institution to adequately monitor their branches and determine where and how they can improve their customer service. 2. Complaints-Handling Brochure for Clients (Opportunity Bank) (English, Serbian, French) Opportunity Bank Serbia has shared with the Campaign a client brochure detailing exactly where and how to lodge a complaint. The brochure provides clients with a list of steps for introducing a complaint or suggestion through various means--such as a suggestion box, telephone call, email, or in person--and also provides information about next steps and what to do if the client is not happy with the outcome. The institution provides contact information for each of their offices to which clients can call and ask for more information. 3. Complaints-Handling Manual (FONDESURCO) (English, Spanish, French) FONDESURCO in Peru shared their Complaints-Handling Manual with the Campaign. The manual carefully describes the complaints process and who is responsible for each piece. Additionally it contains two flow charts detailing the process for complaints and suggestions, copies of forms provided to clients and staff directed at lodging complaints and their respective follow-up, as well as copies of brochures given to clients at offices to inform them about the complaints process. 4. Smart Note: Responding to Client Complaints at Tameer Bank, Pakistan (English) Tameer Bank, Pakistan employs a unique approach to the complains handling process by using preemptive, outbound calls to clients, made routinely from Tameers own in-house call center, the Tameer Customer Service Unit. The Smart Campaigns Client Protection Principle, Mechanisms for Complaint Resolution states that institutions should:

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 have a formal, systematic mechanism for receiving client complaints respond to client complaints in a timely manner use information from those interactions to improve operations Tameers approach to complaint resolution can serve as an excellent practice example of these items. Tameer staff member Murium Hadi discussed the institutions complaint mechanism with Zahra Khalid of the Pakistan Microfinance Network (PMN) revealing several valuable lessons from the field. 5. Smart Payments: An Overview for Microinsurance Providers on Incorporating Client Protection Practices into Payments & Money (English) Smart Payments: Client Protection for Money Transfer is a tool to assist microfinance institutions (MFIs) in incorporating good client protection practices into their process for providing domestic and international money transfer services to clients. While these guidelines are directed toward MFIs, they are general enough to apply to all types of providers offering payments and money transfer services directly to clients. However, these other providers must apply client protection practices beyond what is included in the scope of this tool. Section 1 discusses general guidelines for product design and for partnering with money transfer companies and paying agents. Section 2 outlines key client protection guidelines for each of the three key phases of the payments process: I. Disclosing Product Information to Clients, II. Sending and Distributing Payments, and III. Protecting Client Information & Ongoing Customer Service. For each of the phases listed above, the tool identifies distinct service pointspoints of interaction between the client and the institution. For each service point, the tool describes: o how an MFI can model good practice policies, and procedures; and o which Client Protection Principles (CPPs) apply. Finally, the Annex provides a list of client protection tools that could help MFIs implement the recommendations found in this guide.

List Updated 2/2014