Press Release: Microfinance Leaders Offer Model Law Resource for Financial Consumer Protection
Tuesday, May 5, 2015
The Microfinance CEO Working Group has published Client Protection Principles: Model Law and Commentary for Financial Consumer Protection. This Model Law provides a framework of suggested legislation for financial consumer protection in the microfinance and broader financial inclusion industry.
“With this Model Law, we are pleased to offer real, actionable guidelines and tools for helping to ensure that client protection principles can, in fact, be embedded into the fabric of the microfinance industry,” said Alex Counts, President and CEO of Grameen Foundation and Co-Chair of the Microfinance CEO Working Group. “This framework reflects years of consideration and study across the entire spectrum of microfinance and financial inclusion.”
The Microfinance CEO Working Group advocates in support of responsible microfinance and champions promising ideas and solutions for the industry. Today, the Working Group’s networks collectively represent more than 230 microfinance institutions across 80 countries serving nearly 62 million clients.
The Model Law was prepared with the assistance of New Perimeter, the nonprofit affiliate of global law firm DLA Piper, which provides pro bono legal assistance in underserved regions around the world. The firm worked in partnership with the in-house counsels from the Microfinance CEO Working Group member organizations to develop a legal framework based on the Smart Campaign’s Client Protection Principles. The seven Client Protection Principles set standards that clients should expect to receive when doing business with a microfinance institution, and cover such critical areas as transparency, fair and respectful treatment, privacy and prevention of over-indebtedness.
“We were delighted to have the opportunity to collaborate with the Microfinance CEO Working Group and the Smart Campaign on this important initiative,” said Sara Andrews, Assistant Director, New Perimeter. “We hope the Model Law will serve as a useful tool for lawmakers and regulators around the world to codify the Client Protection Principles.”
The Model Law draws upon a broad survey of financial inclusion practitioners, legal experts, and existing laws and regulations from countries across the globe and is intended for three main uses. First, it offers a template to help policymakers develop actual, enacted legislation. In its entirety, it can help regulators build a complete legal regime for client protection or serve as a guide for policymakers who may only need to address particular legal or regulatory gaps. Second, the Model Law may be used to assess a jurisdiction’s client protection regulations. Third, it can serve as a resource for developing codes of conduct and guidelines, either for a single financial service provider or for groups or industry associations, on effective ways to promote client protection.
“We’re grateful to New Perimeter and our in-house counsels for their tremendous work creating this resource to help promote client protection – one of the most essential tenets of responsible practices in our industry,” said Counts.