CLIENT PROTECTION – ARE WE THERE YET? Sadina Bina, Director EKI Microcredit Foundation Bosnia and Herzegovina

EKI Microcredi Foundation, B&H Highlights Founded in 1996 by World Vision International as a Microcredit Programme, later transformed into a local institution - Microcredit Organization EKI The mission of EKI is to reduce economic causes of poverty in Bosnia and Herzegovina EKI today is one of top three Microcredit organizations at the B&H market with market share close to 17% in terms of portfolio EKI serves a base with over than clients and employs 270 people EKI is recognized as an institution willing to introduce new ideas and projects

Contextual factors to Client Protection in B&H Competitive market Crisis: overindebtedness of clients & financial problems of MFIs MFIs reputation Supportive regulations: Central Registry,data privacy requirements

What is common by local regulation to CPP? MCO’s are required to disclose the effective interest rates following a formula established by the Banking Agency. The effective interest rate must be published at all marketing materials and clearly stated at the loan contract. MCO’s are required to submit annual audited financial statements to the Banking Agency, as well as to publish them in one or more daily newspapers. MCOs are required to participate in the credit registry, submitting client data on a monthly basis.

What EKI does about client protection? We support standing that protection of clients equals to protection of institution Client Protection Program introduced and set up at EKI Policy is adopted by the Board of Directors The Policy is designed in line with the 6 Client Protection Principles (CPP) CPPs are introduced to EKI staff, and EKI tends to make sure that all are aware of CPP importance Senior Management Team is dedicated to implementation of the Policy

How CPP works at EKI? There are adopted practices including: Establishment of an efficient system for preventing overindebtedness and protection of client privacy data Formal policies for ethical behavior of staff Transparency of information important to clients and flexible product offering Well developed polices and systems are fundament for effective client protection. However, there is a risk that staff practices at the field may vary between branches and individuals.

What EKI finds as very important about CPP? The set up of a formal system for monitoring field staff practices Strenghtening of soft skills of Loan Officers in terms of communication with clients (i.e. effective communication of rights and obligations, product terms) Including staff ethics (beyond professional conduct) into appraisal system Comunicating continuous implementation of the principals at all levels of organization

Yet to be improved with CPP Ensure that all MFIs to adopt and implement CPP Make organizations distinctive in terms of CPP by clients and funders Underscore benefits of the implementation of CPP for the organization and to customers Making a difference between organizations that have only adopted policies and those where policies are implemented and applied Introduce certification of organizations for the CPP

THANK YOU!