Client protection in microfinancing

Microfinance refers to very small loans for individuals or micro-businesses.

Client protection principles (CPP) ensure that microfinance is based on responsible, sustainable lending practices, data privacy and respect of human rights.

SMART Campaign 2009–2020

The SMART Campaign was a global initiative from 2009 to 2020 to protect the MFI borrowers and to provide straightforward standards and clear guidance to the MFIs on how to deliver transparent, respectful, and practical financial services to all its clients.

Finnfund has included the SMART Certification requirement in all microfinance investments since 2013. The potential gaps of client protection are identified in the Finnfund environmental and social due diligence process. During the investment lifecycle, the clients are guided to work towards the certification.

New Client Protection Pathway

The SMART Campaign ended in April 2020, and the new SPTF/Cerise Client Protection Pathway was launched in October 2021.

The new framework covers the seven key standards/areas previously known in the Smart Campaign: appropriate product design and delivery, prevention of over-indebtedness, transparency, responsible pricing, fair and respectful treatment of clients, privacy of client data, and mechanisms for complaints resolution. In the picture below and behind this link you may see the content of each of them in more detail.

Finnfund commits to the new SPTF/Cerise Client Protection Pathway requiring contractually our investees to work towards or to maintain the already achieved high level of client protection

Both the pathway and the field of client protection will evolve, and Finnfund will closely follow these developments. For instance, in the future, the principles are being expanded and developed towards including environmental as well as labour requirements. Eventually, the micro-insurance, fintech, off-grid solar, and other sectors where client protection is important will also be included.