Standard 4b

Transparency

Transparency means giving your clients the right information at the time and in the right way, so they can clearly understand and take informed decisions. This includes providing transparent information on product pricing, terms and conditions. 

Guidelines

Calculating Transparent Pricing Tool v2.2 from MicroFinance Transparency

This is an Excel-based tool that can be used to analyze the cost of a particular loan product. This tool helps financial service providers (FSPs) understand how various factors influence the total cost of a loan. It also enables cost comparisons between loans with different fee structures. 

Putting Transparency into Practice: Communicating About Pricing

This brief document describes how FSPs observe the Smart Campaign Principle of transparency, current resources that exist to help providers understand and communicate their prices to clients, and information on where providers can find more information from the Smart Campaign and MFTransparency.

Transparency in Practice

This paper presents Microfinanza Rating’s experiences in client protection, inspired by good practices observed in the field while conducting social ratings and client protection certifications of FSPs. It aims to promote best practices in transparency.

Tools and Templates

Disclosure statement (People's Bank of Caraga, the Philippines)

This disclosure statement helps the provider provide key information to clients regarding bank charges, interest rates and other fees.

Transparency in Promotions and Sales: A Checklist for Financial Service Providers

The tool contains five “good practice” checklists for transparent communications during promotions and sales. These checklists allow providers to check their own practices when selling individual loans, group loans, savings products, and products to clients with extra needs.

Essential Documents for New Clients

This toolkit provides guidelines for, or examples of the following documents that all providers should provide to their new clients. The Loan Contract Guidelines (page 7), Loan Contract Summary & Repayment Schedule (page 11) are particularly important to transparency.

Loan Agreement for Small Business Clients (JSC MFO Crystal, Georgia)

This sample “plain language loan contract” from JSC MFO Crystal, Georgia monstrates how providers can clearly communicate loan terms to their clients. Other providers can use it to improve their own loan contracts.

Loan Contract Summary Handout (Mibanco, Peru)

This sample “plain language loan contract” from Mibanco, Peru demonstrates how providers can clearly communicate loan terms to their clients. Other providers can use it to improve their own loan contracts.

Pre-group training manual (Muktinath Bikas Bank, Nepal)

This staff training manual covers key aspects of effective group formation, including key staff qualities, client training, product comparision, clear information disclosure. Relevant in this context is the content delivered on the fifth day, which covers training clients on interest rate calculations.

Case Studies

Muktinath Bikas Bank group training manual: Supporting informed client decisions

Muktinath’s pre-group training (PGT) manual describes the training provided to its potential clients to introduce them to the provider, its work, products and services, rules, the importance of credit discipline and the benefits of the group mechanism. The PGT Manual also helps loan officers facilitate the training in a way which is both motivational and appropriate to potential clients’ capacity. Written by the CMF Nepal as part of the MFC SP Fund Project.

CREZCAMOS Colombia: Providing transparent information to clients

The case of CREZCAMOS S.A. (Colombia) highlights how an institution can provide transparent product information to clients.