Responsible Financial Inclusion

Responsible Financial Inclusion

Responsible microfinance, particularly the areas of client protection, pricing transparency, and social performance, is raising standards for the sector and creating tools that will better serve clients, investors, and other stakeholders. Since its inception, the MCWG has supported the development and adoption of industry standards that promote the delivery of high-quality financial services to the traditionally excluded.

Social Performance

The PRFI supports initiatives that are playing a major role in advancing commitment and capacity to responsible microfinance, one such initiative is the Social Performance Task Force (SPTF). The SPTF is an ambitious effort by more than 3,000 stakeholders to develop and promote standards and good practices for social performance management (SPM), in an effort to make financial services safer and more beneficial for clients. It has developed Universal Standards for Social Performance Management (“Universal Standards”) – a comprehensive manual of best practices created by and for people in microfinance as a resource to help financial service providers achieve their social goals.

Today, the Universal Standards are part of CERISE’s Social Performance Indicators Tool (SPI4) social audit tool, one of the most widely used assessment tools for double bottom line microfinance institutions.

Client Protection

As part of its commitment to responsible microfinance, the PRFI is a strong supporter of the Smart Campaign and its Client Protection Certification Program. This global initiative is committed to embedding client protection practices into the institutional fabric of the financial inclusion sector, helping to strengthen and elevate it as a model of responsible financial services provision around the world.

The Smart Campaign provides institutions with the tools and resources they need to deliver transparent, respectful, and prudent financial services to clients. Smart Campaign certified organizations have submitted to extensive audits, site visits, and in-person interviews to meet rigorous industry standards on client protection. The PRFI has been at the forefront of this initiative, with local partners constituting more than half of all certified organizations.

In addition to encouraging local partners to undergo Smart Certification, the PRFI also worked with central banks to strengthen client protection regulations. In collaboration with the Consumer Protection and Regulatory Engagement Task Force, which is comprised of the legal teams from Accion and New Perimeter, DLA Piper’s global pro bono initiative, as well as the Smart Campaign, the PRFI has developed the Model Legal Framework for Financial Consumer Protection (MLF), which is promoted widely among key stakeholders in several markets.

Pricing Transparency

The PRFI believes that a responsible financial service provider is transparent about the fees and interest rates it charges (or pays, in the case of deposits). The PRFI motivates their local partners to commit to pricing transparency by agreeing to publish their pricing data using standard methodologies, such as those that were developed by MicroFinance Transparency and currently being leveraged by MicroFinanza Rating’s in their Data Platform pilot, in order to allow investors and clients to make informed decisions.

To view Responsible Financial Inclusion Practice achievements – click here.