Principles of Client Protection in Financial Services: A Guide

The principles in this post are those developed by the SMART campaign which is a global financial sector-wide effort with over 2000 endorsers from 110 countries. Its headquartes are at the centre for financial inclusion at ACCION International

The seven principles explained below were developed through global consultations with a wide range of stakeholders and they include;

1. Appropriate product design. Providers should tke adequate care to design products and delivery channels in such a way that they don’t cause clients harm. Products and delivery channels should be designed with client characteristics taken into account.

2. Prevention of over-indebtedness. Financial service providers should take adequate care in all phases of their credit process to determine that clients have the capacity to repay without becoming over-indebted. In addition, providers should implement and monitor internal systems that support prevention of over indebtedness and should foster efforts to improve market level credit risk management. (such as credit information sharing)

3. Responsible pricing. Pricing, terms and conditions should be set in a way that is affordable to clients while allowing for mobile banking to be sustainable. Providers should strive to provide positive real returns on deposits.

4. Fair and respectful treatment of clients. Financial service providers and their agents should treat their clients fairly and respectfully. They should not discriminate. Providers will ensure adequate safeguards to detect and correct corruption as well as aggressive or abusive treatment by their staff and agents.

5. Privacy of client data. The privacy of individual client data should be respected in accordance with the laws and regulations of individual jurisdictions. Such data should only be used for the purposes specified at the time the information is collected or as permitted by law, unless otherwise agreed with the client.

6. Mechanisms for complaint resolution. Financial service providers and their Agents will have in place timely and responsive mechanisms for complaints and problem resolution for their clients and will use these mechanisms both to resolve individual problems and to improve their products and services

In Uganda, the Central Bank issued consumer protection guidelines that all financial institutions regulated by the Bank of Uganda are required to comply with

PRINCIPLES OF CLIENT PROTECTION FOR MOBILE MONEY AGENTS

1. Transparency

This principle requires that providers of mobile money should communicate clear, sufficient, and timely information in a manner and language that the clients can understand, so that clients can make informed decisions. Key indicators of compliance to this principle include;

• Disclose the prices, terms, and conditions of all products, including fees and information and whether these can change over time.

• Communicate effectively with clients, including clients with literacy limitations.

• Show the total cost that the client is supposed to pay before issuing the service.

• Use multiple channels for disclosing information, such as brochures, fliers, posters, handbooks etc.

• Allow adequate time for clients to review information and ask questions prior to signing documents.

2. Privacy of Client Data

For this principle, the agent must comply with all local data privacy laws. Client information is only used in the ways agreed upon at the time of data collection. Clients trust agents with very sensitive, personal and financial information.

• Use technology that keeps client data secure. Agents should keep data confidential, secure, and accurate.

• Inform clients how their information will be used internally and externally including data shared with 3rd parties and the use of photos.

• Obtain client consent for using information in promotions, marketing materials, and other publications; and for sharing personal information with any external parties.

• Use a written privacy policy that governs the gathering, processing, use, and distribution of client data.

• Offer information, orientation, or educational sessions to clients on how to safeguard information, access codes/ PIN numbers

3. Fair and respectful treatment of clients

This principle requires that financial providers and their agents treat clients fairly and respectfully. They do not discriminate. They should ensure safeguards are in place to detect and correct corruption and unlawful acts. e.g. money laundering
Putting this principle in practice will include the following;

• Financial service providers should spell out organizational values and standards of professional conduct for Agents and staff in a Code of Ethics. It should be approved by Mobile Network Operators or financial service providers.

• Establish the precise steps to take in case of unlawful acts and behaviors. Inform clients of their rights and the highlights of the Code.

• Monitor staff compliance with ethical standards and enforce sanctions for noncompliance. The same rules should apply to third-party collections agents.

4. Mechanisms for Complaints Handling

To implement this principle, financial service providers need to have a mechanism for collecting, responding in a timely manner, and resolving problems for customers. The mechanism is used to resolve individual complaints and improve products/services. This principle in practice includes the following;

• A written policy for customer complaints to be taken seriously, fully investigated and resolved in a timely manner without bias.

• A mechanism to handle customer complaints and dedicated resources to do it

• Well informed agents to handle complaints and refer them to the appropriate persons for investigation and resolution.

• Inform clients of their right to complain and how to submit a complaint to the appropriate person.

• Use a monitoring system to check that complaints are resolved satisfactorily

How dissatisfied clients affect your business

-> A very satisfied client will talk about his/her experiences with 3-4 people, but a dissatisfied client will 8-9 people.

-> When a client’s complaints are received, answered and solved, there is a 90% chance that he/she will return to the institution.

-> 90% of dissatisfied clients whose problems are not resolved will never return to do business with the institution again.

No Complaints # Completely Satisfied Customers

If a financial service provider does not receive concerns or complaints, be careful:

• Clients could be happy with your products and customer service, or
• Clients might not feel empowered to share their concerns and complaints or
• They might not know how to do so
• Clients might not feel like they can complain without this affecting their business relationship with the institution

Customer Care – Dealing with Client Complaints

Types of complaining customers;

When customers are dissatisfied with the service you are providing, they will be one of the 4 kinds of complainers. Aggressive, expressive, passive, constructive. So how do you identify what type of customers you are dealing with and the best way to respond?

1. Aggressive type. This is an extrovert who is controlling, practical and decisive. Aggressive complainers are most difficult to please and are often more concerned with displaying their emotion than actually achieving a solution.

2. Expressive customer. This is an extrovert but they are more sociable. Their social nature means that expressive customers are more likely to complain openly to others but possibly not directly to you. They may use social media to express their dissatisfaction which will give their complaint a public hearing.

3. Passive customer. This is an introvert. They are friendly but can be totally indecisive. Since the business is left unaware of their error, they cannot correct it and the only thing a passive complainer succeeds in doing is depriving the company of the
potential business.

4. Constructive customer. This is organized and critical. Constructive complainers are most beneficial to a business since they are analytical and address their problem to the business in a calm rational and detailed manner. This means you can identify the exact cause of the problem. Making it easier to address and help you avoid future problems. Whatever type of complainer they may be, it is important to deal with all complaints with the utmost care. After all the customer is essential to business success. relationship with the institution

The Process;

-> Thank the customer for taking time to inform you about the complaint. It is an initiative that the customer is prepared to give up their time and money to let you know they have a problem instead of just walking away.

-> Say you are sorry that the problem has happened. This is not an admission of guilt on your part. It’s just good manners and professional as well.

-> Put yourself in the place of the customers. This will instantly give you an advantage as you not only will have more empathy with the customer but also you know your business better than them and so can hopefully see the solution quicker.

-> Get all the facts first. Letting the customer give you all of the information helps you fully understand the situation & if they are emotional, will give them time to calm down. institution

Record the complaint

->Correct the mistake. All of the other points are not really valid if you don’t fix the problem. Make sure that your definition of the right fix is the same as the customers.

-> If the mistake can’t be corrected at the first contact, what is the escalation policy?

-> Aggregate the complaints to know which areas clients are complaining most about

-> Learn from every complaint. Do something, Fix the process, eliminate the fault.

-> Whenever possible, let the complaining customer know that they have helped you resolve a problem. They will feel great and come back again and again (and will probably tell their friends)

-> Minimize reasons for complaints. Do you have a continuous improvement culture? Do you check customers satisfaction regularly? Do you check the quality of services you offer?

-> Remember, it costs a lot to keep an existing customer. Keeping this complaining customer should be the top priority and because of this, you can afford to be generous in your time and effort

Key issues to note when you receive a complaint.

• Every complaint needs to be taken seriously. Latest research suggests that 90% of complainers who feel their complaint has been dealt with satisfactorily are more loyal after the complaint than they were before.

• The power of internet and the media is such that you can never afford to ignore a complainer.

• The customer’s perception is everything. Everyone is entitled to their opinion and needs to be respected. Research indicates that 68% of customers may switch supplier if they don’t feel cared for.

• Rule number 1. The customer is king. Rule number 2, if the customer is wrong, then refer to rule no.1

How AMFIU Business Consult Ltd Can Support

AMFIU Business Consult Ltd is the commercial consulting arm of the Association of Microfinance Institutions of Uganda. The priorities set out above are the work we do with institutions across Uganda and the wider East African region:

1.Portfolio quality diagnostics, including ageing analysis, arrears cause analysis by crop and value chain, and provisioning review.

2.Seasonal agricultural product design, including cash flow appraisal built around the crop calendar and harvest-aligned repayment schedules.

3.Credit appraisal systems, credit committee structures and written appraisal criteria for institutions receiving displaced enterprise borrowers.

3.Deposit mobilisation and funding strategy for institutions seeking to reduce reliance on wholesale borrowing.

4.Bank of Uganda licensing preparation for SACCOs approaching the 30 September 2026 deadline, covering documentation, prudential returns and capital computation.

5.Governance and record-keeping strengthening aimed at the qualifying conditions for bank partnership and funder due diligence.

6.ESG measurement and reporting readiness aligned to Bank of Uganda’s 2025 guidance on the IFRS S1 and S2 standards.

7.Financial literacy and capacity building for members, cooperatives, VSLAs and farmer groups, delivered in the field and through Training of Trainers.