THE financial crisis experienced in many countries which are all traceable to consumers’ over-indebtedness, as well as the increased competition from lenders who gain undue advantage by not subscribing to acceptable standards of consumer treatment, all point to the need for the adoption of best practices in lending activities, especially to the lower-income microfinance sector.

Recognizing this need to shape and institutionalize future consumer-protection practices and policies, the Rural Bankers Association of the Philippines (RBAP) and other microfinance industry stakeholders have recently signed a memorandum of agreement to collaborate in a research which will document the Philippine experience with microfinance and develop a consensus around proconsumer best practices.

The “Beyond Codes” global action research project of Accion International’s Center for Financial Inclusion (Accion CFI) brings together RBAP, the Microfinance Council of the Philippines Inc.  and the Microenterprise Access to Banking Services  in sharing good practices that support the principles of client protection for providers of microfinance services, among other possible collaborative efforts in that direction.

Accion International, based in Boston, Massachusetts, is a private nonprofit organization with the mission of giving people the financial tools they need to work their way out of poverty with dignity and pride.

RBAP president Tomas Gomez IV said in a statement, “Rural banks and other microfinance institutions need to deepen their social commitment, especially to marginalized sectors of the society where most of our microfinance clients came from. To fulfill our social mission to be the catalysts of development in the countryside, we need to look deeper into what more we can do to ensure that we only have the best interest of our clients in mind.”

“This is what makes the Beyond Codes action research project very relevant. For one, we see this project as instrumental in promoting transparency where lenders disclose pricing, terms and conditions of financial products in a form understandable to clients. We also see this project encouraging providers to have in place timely and responsive mechanisms for complaints and problem resolution for their clients,” said Gomez.

Specifically, parties to the project agreed to participate in the Beyond Codes guided self-assessment of client-protection practices, participate in national dialogues to share experiences and results of the assessments, share nonconfidential project information, evaluation and analysis, and participate in national and international dialogues to share results of the research project.

They have also committed to undertake any other activities that ensure a complementary approach to microfinance client protection practices and innovation within the respective networks and among their members.