Promoting Financial Inclusion - United Nations Development ...

• Prior to sale: Customers are given adequate time (at least 1 week) to review the terms and conditions
of the product and have an opportunity to ask questions and receive information prior to signing
contracts.
• At the point of sale: Loan contracts show the repayment schedule that separates principal, interest, fees
and define the amount, and number and due dates of instalment payments.
• After the point of sale: The client regularly receives clear and accurate information regarding the
account.
Principle 3: Appropriate Collections Practices
A fi nancial institution measures up to this principle by maintaining high standards of ethical behaviour even when
clients fail to meet their contractual commitments.
• The code of ethics requires all clients to be treated with dignity and respect, even when they fail to
meet their contractual commitments. The code forbids subjecting a borrower to abusive language or
threats by collection agents.
• Loan contracts include clauses on late repayment and default, and what the borrower should expect in
these cases.
• Debt collection practices and procedures are clearly outlined in a staff book of rules or credit procedure
manual.
• Specific step-by-step procedures and time frames are outlined for late payment recovery and how to
proceed when borrowers are in default.
• If the institution uses 3 party debt collectors, these agents are expected to follow the institutional codes
of ethical practices.
• There is recognition that accurate analysis of a borrower’s repayment capacity is a first step to preventing
delinquency, and the organization may hold some responsibility for borrowers’ failure.
• Collections staff receive training in acceptable debt collections practices and loan recovery procedures.
• Practices and procedures are followed widely in the organization and monitored by the internal audit
department. Violations are sanctioned.
• Rescheduling policies prevent automatic debt extensions. Re-scheduling procedures follow written
protocol through official negotiations.
Principle 4: Ethical Staff Behaviour
A fi nancial institution measures up to this principle by creating a corporate culture that values high ethical standards
among staff and ensuring safeguards are in place to prevent, detect, and correct corruption or mistreatment of clients.
• A code of business ethics, code of conduct, or other guidelines spell out organizational values and the
standards of professional ethics expected of all staff. The code of ethics has been reviewed and approved
by the Board and is included in staff rule books or administrative policies.
• Staff rules include provisions on what is considered acceptable and unacceptable behaviour. Provisions
describe reprimands and actions that can result in termination of employment.
• Anti-corruption policies and procedures are in place, provided to each staff member and enforced by
decision-makers.
• Hiring procedures assess new employees for compatibility with organizational values and ethics.
• New staff receives orientation on the practicalities of following codes of conduct and refresher courses
include customer service standards.
• Managers and supervisors are tasked with detecting corruption and client mistreatment in the normal
course of business.
• Managers and supervisors review ethical behaviour, professional conduct and the quality of interaction
with customers as part of staff performance evaluations.
Principle 5: Mechanisms for Complaints Handling and Resolution.
A fi nancial institution measures up to this principle by having a mechanism for collecting, responding in a timely
manner, and resolving problems for their clients.
• A written policy requires customer complaints to be taken seriously, investigated and resolved in a
timely manner.
• A ready mechanism to handle customer complaints, problems, and feedback is in place and accessible
to customers.
64 PROMOTING FINANCIAL INCLUSION