All microfinance institutions and other institutions dealing with microfinance, which are part of the Association of Microfinance Institutions (hereunder: AMFI) hereby adopt the Code of Business Ethics of Microfinance Institutions with the purpose of:
- Establishing recognizable standards of good conduct and open communication towards the users of their services and towards other microfinance institutions
- Promoting the idea of responsibility, transparency and professionalism in their operation
- Promoting the achievements of the entire microfinance sector and increasing its reputation in public
I Basic principles
- The Code of Business Ethics of Microfinance Institutions (hereunder: the Code) is a voluntary framework which microfinance institutions use for regulating their relations and business with clients, with other microfinance institutions, with banks and other finance institutions, as well as with other social subjects and the general public.
- By accepting the Code, microfinance institutions set a standard of good practice, to which they adhere as to a minimum in their operation.
- The provisions of the Code are obligatory for all member-institutions of the AMFI and their acceptance and application represents one of the basic pre-conditions for membership to the AMFI.
- The Code contains the basic elements which every microfinance institution needs to have in its internal regulations.
- The professional culture based on this Code should be accepted by all the employees and should be made part of the mode of operation. Ethical conduct within an institution is stimulated through defining the principles and rules of conduct, through positive examples set by managers, through detection and resolving of potential ethical problems at an early stage, as well as through sanctioning and unethical conduct by anybody, with no exceptions.
- Ethical conduct of MF institutions is based on complying with legal and other regulations and with contracts between partners. On the whole, the operation must be in accordance with current local laws and no violation or deviation from any law can be stimulated, approved, or concealed.
- Whenever possible, MF institutions members of the AMFI will try to resolve any disputes between them through agreement and in good faith. If this is not possible, disputes will be resolved through arbitration within the AMFI or, as a last resort, before regular courts. AMFI arbitration will be used for resolving disputes between member-institutions of the AMFI, especially regarding e.g. preventing non-loyal competition among member-institutions; recruitment of employees of another member-institution in a way which is not in accordance with a fair market competition; giving inaccurate information to be used in official reports of the AMFI, which are result of non-conscientious operation of a certain AMFI member institution or of its pre-meditation etc.
II Special regulations
2.1. Relations with clients
- The given microfinance institution will ensure that its employees are familiar enough with all the products, services, and possibilities offered by the MF institution, as well as that they are capable of proposing a product or service which suits best the concrete need of the particular client.
- All MF institutions need to apply unique, unambiguous terminology with a generally accepted meaning, in order to make it possible for a client to compare the same or similar types of products or services offered by different microfinance institutions.
- The given microfinance institution will give its clients accurate and useful information on the characteristics of its products and services, as well as on the terms, remunerations and decisions which are applied. All the documents treating business policy, forms, and contracts with clients cannot contain any unclear provisions, which would impose upon clients non-specific obligations and would put clients into an insecure position in the sense of execution of rights and obligations towards each others.
- In executing its obligations towards the clients, MF institutions will act efficiently and with due attention, with an obligation for all the employees to protect professional secrets and the privacy of every client.
- Microfinance institutions will put maximum efforts into avoiding conflicts of interests. In situations in which it is inevitable, they must ensure equal treatment of all clients.
- The given microfinance institution will sustain from giving advice to clients who might inspire transgressions or transactions with funds which can be assumed to have come from illegal activities.
- All information about clients and business partners is considered a professional secret, even when the status of client or business partner ends. No personal information about clients can be revealed, except in cases clearly defined by law, or at a direct request of the client or with their explicit approval. For the purpose of ensuring the above stated, transactions with clients require clear identification of each client.
- Information about clients is used by microfinance institutions for efficient providing of concrete services and in a collective form as a base for internal and external studies and analyses. A client must have the right of access to information about himself/herself for the purpose of verification or potential correction of inaccuracies.
- Information systems of microfinance institutions and of the Association, regardless of the technological background, must be specially protected from unauthorized access to databases.
- When a client discovers a fault in his/her business with the given microfinance institution or when a client considers that he/she has been done injustice and informs the given microfinance institution of this, the microfinance institution has the obligation of verifying the allegations in a reasonable time period and eliminating, i.e. correcting the fault without undue delay.
- All member-institutions of the AMFI must provide for their clients the space and a clear proper procedure for all kinds of complaints, objections, or claims related to services provided to them.
2.2. Marketing promotion and information
- A good business relationship is based on openness and mutual trust, which implies that all the information exchanged by the MF institution and the client needs to be accurate and timely.
- Every microfinance institution will clearly identify itself in public and in the market. This implies personal communications with clients and communications through the available public media. The list of services offered needs to be precise and true in describing their characteristics.
- All information on terms and remunerations for the services offered (e.g. interest rates, maturity periods, commissions, etc.) must be available in all the offices of the given MF institution. All member-institutions of the AMFI take on the obligation to submit basic information and changes to the AMFI secretariat, in order to ensure equal availability for the general public.
- All the communications, announcements and other marketing activities by microfinance institutions must be clear, unambiguous and true. They must not delude the public, disturb good business traditions or harm others. An open market competition allows all means of marketing and all forms of communication, as long as the information given describes characteristics of the microfinance institution, or the advantages of its service or products, with the purpose of fair achievement of expansion in the market.
- In their public announcements, microfinance institutions will be fair, with no intention of putting their competitors in the market into a subordinate position by promoting themselves and their work (e.g. using attributes like “best”, “safest” or similar might imply that other microfinance institutions are not good or trustworthy and might thus misinform the public). In their marketing promotion of products and services, microfinance institutions can use these words only if there are objective criteria by which one can actually determine that one of the microfinance institutions is best by some criterion, by which reputable local or foreign expert organizations have deemed the given microfinance institution or its management the best. In such case, the name of the institution having given the award should be stated, as well as the period for which the award is valid.
2.3. Relations with other microfinance institutions, banks, financers and investors
- A good business relationship is based on openness and mutual trust, which implies that all the information exchanged among the microfinance institutions within the AMFI or the information given to institutions outside of the sector needs to be accurate and timely.
- In their contacts, microfinance institutions will follow all the current rules and regulations. This also applies on other professional or other types of contacts with other subjects, with a special stress on the protection of interests and values of the microfinance sector, fairness in contacts and keeping a fair competition, paying attention to maintaining a good reputation of the other participants.
- Unfair competition is not allowed. Such competition includes, but is not limited to: unreasonably low prices and remunerations for an institution’s services; unethical collecting of information about competitors; spreading of any type of information on competitor institutions, especially misinformation on them; recruiting employees from other institutions in an unfair or non-transparent manner, etc.
- Unfair forms of collaboration with competitors, which include, but are not limited to any activities related to agreements on division of the market, to amounts of remunerations, or any other type of closed-type association with the purpose of assuming a favored position in the market, are not allowed.
- When requesting funds from banks, other financers or investors, as well as donators, an microfinance institution must give the potential trustee an accurate and objective image of its operation through Annual Reports, Audit Reports, “Rating Reports”, or another generally accepted form of reporting, as well as through projections of future operation.
- Microfinance institutions must with no exceptions fulfill in the agreed manner all their obligations towards their trustees and thus contribute to the improvement of the reputation of the entire microfinance sector.
2.4. The collecting, processing, using and protecting of data on the microfinance sector
- Every member-institution of the AMFI takes on the obligation of regular (e.g. monthly) delivery of information on its operation to the AMFI secretariat, in a form, content and format which will be agreed upon in advance at a session of a proper AMFI organ. A regularly updated report for the whole AMFI, as well as for individual member-institutions, will be constantly published through the AMFI bulletin, the AMFI web site, or in another appropriate way.
- Microfinance institutions guarantee for the accuracy of information delivered, while the AMFI guarantees for the credibility of collective overviews and reports and for protection from any kind of abuse.
- The AMFI must at all times ensure equal availability of information on every one of its member-institutions for any interested institution outside the sector.
- The AMFI will provide a joint data base for the member-institutions which wish to exchange lists of clients or other similar data.
III Resolving of disputes and the measures against violations of the Code
- If there are problems or misunderstandings among microfinance institutions which have accepted the Code, they take on the obligation of finding a solution through dialogue, based on the principles of good business practice. If direct dialogue among the two or more parties concerned does not result in a solution, microfinance institutions will attempt to resolve the misunderstanding (dispute) through AMFI arbitration.
- Violations of rules stated in this Code and disputes among microfinance institutions which have accepted this Code, resulting from their contacts, will be resolved in accordance with the rules of AMFI Arbitration Committee.
- When there is reasonable suspicion that some member-institution of the AMFI is violating provisions of the Code or laws, every party concerned, including the media and the public, has the right to request from the microfinance institution a declaration on the issue and to receive a reply within a period of 10 days. If the microfinance institution does not respond to the request for declaration or does not provide proper proof of operation in accordance with the Code and the legal regulations, the party concerned has the right to file a complaint to the AMFI.
- The AMFI will, within a reasonable timeframe, (which is stated in the rules of the Arbitration Committee) analyze the validity of the complaint, establish the facts in an impartial manner, and announce its decision.
Upon completion of the process of establishing responsibility, the AMFI (the Arbitration Committee) will use one of the following measures:
- Warning, which is published in the bulletin and on the AMFI web site
- Public warning, which is also published in mass media
- Exclusion from membership to the AMFI
- Other measures stated in AMFI documents
- The measure of exclusion from membership to the AMFI will, upon completion of the process of establishing responsibility, be used against a member-institution which has repeated a violation of the Code for which it had already received a public warning, or a member-institution which has done significant harm to the reputation of the microfinance sector, its institutions or member-institutions of the AMFI.
- The Arbitration Committee consists of 3 to 5 members selected by the AMFI Assembly, at the suggestion of the Ruling Board or of all member-institutions. If a member of the Arbitration Committee comes from an AMFI member-institution concerned in dispute before the Arbitration Committee, the member will not be given a vote in the rendering of a decision in relation to the dispute.
- An aggrieved party can complain to decisions of the AMFI Arbitration Committee. Decisions of the AMFI Assembly in relation to complaints to decisions of the Arbitration Committee are final and obligatory for all member-institutions of the AMFI. An aggrieved party can also request protection of its rights and interests before a regular court, but this automatically puts in question its membership to the AMFI.
IV Transitional and final provisions
- This Code becomes effective on 23rd November, 2005. All member-institutions of the AMFI will bring their documents, rules and operation in accordance with the AMFI provisions by the date of __.__.___.
- All microfinance institutions in Bosnia and Herzegovina and the region will be introduced to the Code. By accepting its provisions, they will be enabled to apply it in their operation.
- This Code, in addition to its basic principles, also contains more detailed rules, which can be modified and developed further.
- Any member-organization of the AMFI can start an initiative for modifications or additions to the Code. Modifications and additions are adopted in the same way as the Code itself.
- The text of the code must be available to the public through the bulletin and as a constant feature of the AMFI web site. It can also be published in other suitable ways.
Sarajevo, 23rd November, 2005