1. Introduction to the Smart Campaign www.smartcampaign.org

2. Agenda Introduction to the Smart Campaign
Principles of client protection
Client protection certification
Tools available for improving client protection
This is the agenda for today’s discussion. We will begin with an introduction to the Smart Campaign. 2

3. The Smart Campaign… …represents a global, industry-wide effort
…has an international steering committee
…collaborates with the Social Performance Task Force (SPTF), MIX Market Social Reporting, MF Rating Agencies, MFTransparency etc,
…is housed at the Center for Financial Inclusion at Accion International
Description of the Campaign: The Smart Campaign is a global campaign made up of microfinance leaders from around the world who believe protecting clients is not only the right thing to do, but the smart thing to do. By providing microfinance institutions the tools and resources they need to deliver transparent, respectful and prudent financial services to all clients, the Smart Campaign is helping the industry make good on its double bottom line promise and elevating microfinance as a model of responsible banking around the world.
[Read the information on the slide]
More information on the Campaign’s partners:
•The Center for Financial Inclusion at ACCION International (MFIs, Networks, Associations)
•CGAP (Donors, Funders, Investors & Regulators)
•“Beyond Codes” Action Research Project
Campaign Steering Committee:
Comprised of respected leaders in the microfinance industry from a diversity of regions and institutions, including the Consultative Group to Assist the Poor (CGAP) at The World Bank, Deutsche Bank Social Investment Group, the World Savings Bank Institute, WWB Colombia, KfW (Germany), Ujjivan (India), CARD Bank (Philippines), the Microfinance Centre (Eastern Europe & Former Soviet Union), and Fonkoze (Haiti).

4. Why Now?
Now is a critical time to focus on client protection, for several reasons:
Demands for accountability and transparency
Microfinance crises in several countries
Negative media attention regarding impact
Public and governmental concern over high interest rates
Rapid growth, rising competition, and new players
The Smart Campaign comes at an important moment in the history of microfinance. This is the right time to focus on client protection because:
Stakeholders (internal and external), as well as the public and media increasingly demand accountability and transparency from the microfinance industry
Several countries have experienced recent over-indebtedness crises
The media routinely questions the real impact of microfinance
Public and governmental scrutiny of high interest rates poses a reputational risk for the industry
The industry is experiencing rapid growth and the entry of new players into the marketplace, making it important to have industry standards for client protection
Ask Participants: Why is your institution/network interested in client protection?
Other factors that make the Campaign important at this moment:
The principles of consumer protection are widely agreed upon
Many networks and MFIs have already created client protection codes
The Campaign and the topic of client protection have gained attention from regulators, legislators, and politicians
Funders and investors are including the principles of client protection in their due diligence processes
Some policy makers are considering consumer protection legislation or have already enacted it

5. Client protection: 3 pillars
RESPONSIBLE FINANCE
Regulation for client protection and supervision
Financial education and capability
RESPONSIBLE FINANCE
Standards and codes of conduct for the industry

6. Milestones To-Date Timeline 2016 2015 2013 2011 2009
SC officially launched in September 2009
Client Protection
Principles updated from 6 to 7
Certification Program launch: January 24, 2013 with Standards 1.0
Draft Standards 2.0 launched for public comment September 29th 2015
Standards 2.0 go “live” in July 2016
2009
2011
2013
2015
2016
Milestones To-Date
Standards that reflect social norms and expectations of an evolving industry must be dynamic. The Campaign has a history of making adjustments to its standards and where we set the bar.
In 2009 the Center for Financial Inclusion at ACCION convened for a series of dialogue groups around client protection. These dialogue groups produced over 100 suggested indicators for good practice in client protection. Using these suggested indicators, the Center for Financial Inclusion carried out a fourteen-month long research project called “Beyond Codes”. In this project, fourteen MFIs piloted the implementation of pro-client policies and practices and their experience helped solidify the Client Protection Principles, as well as best practice examples of client protection, and ideas for pro-consumer policies and practices. After more dialogue groups, and collaboration with dozens of other institutions and networks, including CGAP, the Center for Financial Inclusion launched the Smart Campaign and a widely accepted set of Client Protection Principles.
In July of 2011, the Principles were expanded to address multiple financial products and the concept of “non-discrimination.”
In 2013, after one year of piloting and industry discussion, the Campaign launched certification program and what we call standards With the launch of Certification the standards took on a new dimension, beyond use in assessments, tools and trainings – they became a specific “bar” that institutions must meet to become certified.
And now we present draft Client Protection Standards 2.0 – which represents 18 months of expert consultation, revision and industry consultation which we will open for public comment and feedback, freeze them, update our tools and materials and then launch in June 2016.
Our plan is to have a 3 year major update cycle after that so that major revisions and Standards 3.0 would launch in June 2019.

7. Campaign Endorsers Globally

8. Goals for Smart Campaign
Policy and Advocacy level engagement with Regulators using Model Legal Framework.
Build capabilities around Smart Standards 2.0 and keep updating and improving standards to reflect evolving business models and industry trends
Implement Regional Strategies – Africa, LAC, MENA, Asia.
Empower and engage directly with clients (e.g. develop a research and learning agenda for Client Voice work)
Build a market for the Smart Certification.

9. Our Partners:

10. Agenda Introduction to the Smart Campaign
Principles of client protection
Client protection certification
Tools available for improving client protection
This is the agenda for today’s discussion. We will begin with an introduction to the Smart Campaign. 10

11. Principles of client protection
Appropriate product design and delivery
Prevention of over-indebtedness
Transparency
Responsible pricing
Fair and respectful treatment of clients
Privacy of clients data
Mechanisms for complaint resolution
[Each principle is listed, along with how the Smart Campaign defines the principle].
These are the Seven Principles of Client Protection
1. Appropriate product design and delivery
Providers will take adequate care to design products and delivery channels in such a way that they do not cause clients harm. Products and delivery channels will be designed with client characteristics taken into account.
2. Prevention of over-indebtedness
Providers will take adequate care in all phases of their credit process to determine that clients have the capacity to repay without becoming overindebted. In addition, providers will implement and monitor internal systems that support prevention of overindebtedness and will foster efforts to improve market level credit risk management (such as credit information sharing).
3. Transparency
Providers will communicate clear, sufficient and timely information in a manner and language clients can understand so that clients can make informed decisions. The need for transparent information on pricing, terms and conditions of products is highlighted.
4. Responsible pricing
Pricing, terms and conditions will be set in a way that is affordable to clients while allowing for financial institutions to be sustainable. Providers will strive to provide positive real returns on deposits.
5. Fair and respectful treatment of clients
Financial service providers and their agents will treat their clients fairly and respectfully. They will not discriminate. Providers will ensure adequate safeguards to detect and correct corruption as well as aggressive or abusive treatment by their staff and agents, particularly during the loan sales and debt collection processes.
6. Privacy of client data
The privacy of individual client data will be respected in accordance with the laws and regulations of individual jurisdictions. Such data will only be used for the purposes specified at the time the information is collected or as permitted by law, unless otherwise agreed with the client.
7. Mechanisms for complaint resolution
Providers will have in place timely and responsive mechanisms for complaints and problem resolution for their clients and will use these mechanisms both to resolve individual problems and to improve their products and services. 11

12. Certification Standards
100% compliance

13. Agenda Introduction to the Smart Campaign
Principles of client protection
Client protection certification
Tools available for improving client protection
This is the agenda for today’s discussion. We will begin with an introduction to the Smart Campaign. 13

14. Smart Campaign : Theory of Change
Commitment to CPPs
Endorsement
Training
Analysis of CPPs
Smart assessment (self / Accompanied
Smart Assessment
Improvement of CPPs
Implementation of action plan
Specific upgrading projects
Use of tools
Monitor (public recognition)
Client Protection Certification
At the Campaign, through our experience we developed what we call as a theory of Change.
According to the this theory, the first step towards initiativeThese are the heart of Campaign’s technical work, which include capacity building, tool creation and the new certification program. All of the Campaigns work is toward service towards improving client protection practices.

15. Vision of the Smart Campaign
The Smart Campaign envisions a fundamental transformation of the microfinance industry in four key ways:
Focus on clients
All industry stakeholders will put the interests of clients first
Transparent and prudent services
MFIs will provide transparent, respectful, prudent financial services
Full integration of client protection
Client protection principles will be fully integrated into all microfinance operations
Gain pro-consumer reputation
The microfinance industry will be distinguished as leader in responsible finance
The Campaign’s vision is to distinguish microfinance as a pro-consumer industry that puts the interests of clients first. The Campaign envisions an industry that provides transparent, respectful services and fully integrates client protection into the operations of MFIs. By doing this, the Campaign will help to distinguish the microfinance industry as a leader in responsible finance.
Some other things to note. The Campaign is striving to:
•Encourage informed and confident customers
•Serve as a positive influence on mainstream financial sector 15

16. Certification Program
  The Smart Certification program is important:
To enable financial institutions worldwide to demonstrate their adherence to the Campaign's client protection principles as verified by third-party auditors.
To publicly highlight financial institutions who meet the minimum standards for client protection.

17. Who is eligible for Certification?
Retail Financial Institutions who serve the poor including:
Banks
Consumer Finance Companies
Credit Unions
Non-Bank Financial
Companies
NGOs

18. What are organizations Certified Against?
In order to be Certified a financial institution must meet all 25 standards based on the 7 Client Protection Principles

19. Certification Standards
7 Principles
25 Standards
86 Indicators
100% compliance

20. Licensed Certifiers
The Campaign expects newly accredited certifiers to be on-stream by the end of 2016

21. Accredited Assessors
Lead Assessor
Support Assessor
Smart Assessment

22. Pricing for Smart Certification
 Smart Campaign does not set pricing for the Smart Certification Program 
Approximate cost for Smart Certification :

23. Monitoring progress: Certification
Client Protection Certification is an independent, third-party evaluation to publicly recognize financial institutions that meet adequate standards of care in client protection.
The Certification program was launched in 2013 to set global standards around client protection in the microfinance industry.
Today there are more than 60 Smart Certified FI across the globe serving more than 30 million clients.

24. Preparing for Certification
Step 1: Orient Yourself with the Certification Standards Step 2: Download the Getting Started Questionnaire and conduct self-assessment Step 3: If ready, go for a Certification mission. If not ready take necessary steps to diagnose and improve areas of weakness
The standards for certification are publicly available. The Smart Campaign recommends that any institution interested in certification conduct an internal review of their own practices against those standards. The Getting Started Questionnaire is a good starting tool for this purpose. If an institution needs to upgrade its practices, it may wish to obtain an assessment from one of the trained assessors ( participate in a training, or apply one of the Smart Campaign tools. In a few cases, MFIs may wish to seek technical assistance for specific upgrading projects. Certification is achievable for most institutions with time and effort but each will have its own timeline. The Smart Campaign recommends the following steps illustrated in the figure below to determine the best course of action for an institution

25. Possible paths for Certification
Smart Certified
Licensed for two years
Conforms/Complies
Enter the progress phase – 4 months
Streamlined Certification
Long term corrective action
Non Conformity/compliance
The standards for certification are publicly available. The Smart Campaign recommends that any institution interested in certification conduct an internal review of their own practices against those standards. The Getting Started Questionnaire is a good starting tool for this purpose. If an institution needs to upgrade its practices, it may wish to obtain an assessment from one of the trained assessors ( participate in a training, or apply one of the Smart Campaign tools. In a few cases, MFIs may wish to seek technical assistance for specific upgrading projects. Certification is achievable for most institutions with time and effort but each will have its own timeline. The Smart Campaign recommends the following steps illustrated in the figure below to determine the best course of action for an institution

26. Agenda Introduction to the Smart Campaign
Principles of client protection
Client protection certification
Tools available for improving client protection
This is the agenda for today’s discussion. We will begin with an introduction to the Smart Campaign. 26

27. Improving Client Protection Practice
“My institution believes that client protection is important—but we need help improving practice!”
The Smart Campaign offers over 60 practical tools to help financial service providers implement the client protection principles.
All of the tools are available for download free of charge.
New tools are added regularly.
This is a statement that we hear from many practitioners. The Smart Campaign responded by:
Offering dozens of practical tools to help financial service providers implement the client protection principles.
Making all of the tools available for download free of charge.
Adding new tools on a regular basis. 27

28. Tools to improve practices
Conducting Client Protection Assessments: A Guide
How to Develop an Institutional Code of Ethics
How to Talk to a Bank: A Brochure for Consumers
Client Business Evaluation Toolkit
Educating Clients about Client Protection
Smart Lending: Client Protection in the Loan Process
“How to” Guides
Case studies
Technical guides
Example forms
Training presentations
Strategic planning guides
Find these tools and dozens more on the Smart Campaign website.