Codes of Conduct and the Role of Microfinance Associations in Client Protection

Paper
Date Published: 
Jan 2012
Author: 
Forster, C.
Publisher: 

Exploring the importance of self-regulation by microfinance associations

This technical note explores why and how microfinance associations may choose to adopt and promote self-regulation through a code of ethics. It builds on the SEEP Network’s previous work on consumer protection, extending the thesis that self-regulation can contribute significantly to promoting effective client protection practices. The note explores how microfinance associations can promote positive outcomes from self-regulation, and discusses actions that limit the effectiveness of such efforts.The note emphasizes that a code of conduct administered at the microfinance association level has greater impact than codes implemented by individual MFIs. The note presents case studies of three microfinance associations that face similar challenges in promoting self-regulation and good practices among their members, but have different motivations for launching a code of conduct. These case studies illustrate different approaches to self-regulation. They include:

  • Adopting self-regulation as a response to crisis, the case of the MFIN Code of Conduct in India;
  • Proactively managing political risk through a voluntary Code of Conduct, the case of PMN in Pakistan;
  • Industry building through a Code of Ethics, the case of ProDesarrollo in Mexico.
Type: 
Paper