Investors Implementing the Client Protection Principles in Microfinance

February, 2010     Estelle Lahaye, Katherine McKee

Client protection is a key tenet of microfinance. The Client Protection Principles and the SMART Campaign are the heart of an industry-wide initiative aimed at safeguarding the interests of microfinance clients. The end goal is adoption of appropriate policies, practices, and products by retail providers. By endorsing the six principles and joining the Campaign, providers commit to take practical steps to treat clients fairly and respectfully while avoiding practices that might harm them.

Microfinance providers are now beginning to diagnose how they stack up against each principle and to experiment with how best to improve their products and processes, as needed. Given their role in building the microfinance industry, investors can play a key role in this work, by supporting their partners and creating strong incentives for the industry to make progress. CGAP consulted widely across the investor community to develop the Technical Guide for Investors on Implementing the Client Protection Principles, which provides practical advice to diverse investors on how to integrate the Principles within every dimension of their work.

The Client Protection Principles have met with widespread support across the microfinance industry. The challenge, however, is finding meaningful and practical ways for the hundreds of industry players that have endorsed the Principles to take action. This is particularly true for microfinance providers, who are on the frontline of ensuring that clients receive appropriate products and treatment. But it is also true for microfinance associations, networks, and funders, since each can play a powerful role in accelerating the industry-wide process and supporting widespread uptake by providers.