Finance lobbies embrace NGO complaints
Finance lobbies embrace NGO complaints
Two financial institution associations have responded to a joint complaint filed by civil rights groups to the International Finance Corporation’s (IFC) Compliance Advisor Ombudsman (CAO) over the failings of its independent accountability mechanism, that they say have led to “destroyed lives and wrecked communities”.
The complaint was filed by Equitable Cambodia and rights group Licadho on behalf of affected borrowers. It details how the IFC failed in its obligation to conduct due diligence and supervise projects to ensure their compliance with performance standards.
“The complainants are calling for the IFC’s CAO to launch a swift, independent investigation into the harms caused by these investments,” a statement from Licadho said.
On May 3, the rights group announced that the IFC has accepted and will move ahead with its review of the complaint that alleges human rights violations and failure to meet IFC performance standards by six microfinance institutions (MFI) and banks that offer microloans in Cambodia.
Complainants will be able to choose between dispute resolution or a compliance appraisal and investigation that will determine the full size and scope of violations of IFC policies and performance standards.
“These complainants are taking a risk in sharing their experiences in order to expose the harms and abuses perpetrated by MFIs and banks in Cambodia,” said Pilorge Naly, Licadho’s outreach director. “The IFC’s reckless investments and lack of due diligence regarding its microfinance projects have destroyed lives and wrecked communities across Cambodia, and they must take steps to offer real relief to these borrowers.”
The Association of Banks in Cambodia (ABC) and the Cambodia Microfinance Association (CMA) on May 10 said that they are aware of the recent statement by the two civil rights organisations.
“ABC and CMA are considering the issue seriously,” they said in a joint statement. “The banks and financial institutions have been exerting themselves to serve and help the people.
“It would be regretful that those endeavours to promote financial inclusion, poverty alleviation and economic growth would somehow be diminished or undermined.”
They added that customer and client protection is a key part of the institutions’ agenda, and that they have both been engaging with the National Financial Inclusion Strategy 2019-2025. The statement said actions have been taken to ensure the respect of Client Protection Principles.
ABC, CMA and the Cambodia Association of Finance & Technology officially launched the revised Banking and Financial Institutions’ Code of Conduct – also known simply as “the Code” – as well as the updated Lending Guidelines on March 4 after a six month trial period.
The Code sets minimum standards, modelled after international best practices, to be observed by all its members. Its objectives are to provide financial services with transparency, responsibility, professional ethics, and fair and free competition, with the goal of sustainable economic growth that eventually leads to the reduction of national poverty.
During the pandemic, financial institutions across Cambodia launched a number of loan restructuring initiatives that were offered to 627,524 customer accounts, which, as of March, amounted to $7.38 billion.
“We acknowledge that isolated cases of misconduct or breach could always happen,” the associations’ joint statement said. “We welcome constructive criticism and are calling for all interested parties to bring to our notice any such cases, and where materialised, disciplinary measures will be taken with fairness, diligence and independence.
“We will take the perspectives of our clients into consideration. We will continue to conduct impartial inquiries and ensure redress to affected parties whilst taking appropriate action against offenders.”
Cambodia is home to 56 commercial banks, 84 MFIs and 232 rural credit operators.
