What is the microfinance industry doing to ensure that the poor do not fall prey to predatory lenders?
Many countries are concerned about the impact of excessive interest rates, abusive lending practices, and over-indebtedness on poor borrowers. Quite a few players in the industry are now focusing on consumer protection issues. Typical consumer protection measures include disclosure requirements, rules and prohibitions related to lending practices, mechanisms for handling complaints or disputes, and consumer education. The ACCION International/ MicroFinance Network “Pro-Consumer Pledge,” FINCA’s “Consumer-Oriented Ethical Statement” and Freedom from Hunger’s “Statement on Ethical Treatment of Clients” are examples of network organizations articulating pro-consumer principles. The SEEP Network, through its Pro-Client Working Group, has resources on the subject. Even in countries where consumer abuse is not yet a problem, promoting voluntary consumer protection codes and practices may reduce future pressure to over-regulate. An increasing number of individual MFIs are adopting voluntary p
Many countries are concerned about the impact of excessive interest rates, abusive lending practices, and over-indebtedness on poor borrowers. Quite a few players in the industry are now focusing on consumer protection issues. Typical consumer protection measures include disclosure requirements, rules and prohibitions related to lending practices, mechanisms for handling complaints or disputes, and consumer education.
