CMA, US’ SPTF team up on financial consumer protection
CMA, US’ SPTF team up on financial consumer protection
The Cambodia Microfinance Association (CMA) and US-based Social Performance Taskforce (SPTF) have teamed up to promote inclusive, principled practices from a risk-management standpoint to drive responsible growth, improve financial stability and foster consumer protection.
To this effect, a memorandum of understanding (MoU) on “Strengthening Responsible Inclusive Finance in Cambodia” was signed between the CMA and SPTF on July 22.
At the signing ceremony, CMA chairman and Association of Banks in Cambodia (ABC) board member Sok Voeun said the partnership “comes in the context of Smart Campaign phasing out, leading to the SPTF-CERISE partnership to play a more active role in that space.
“To this end, the partnership will also work toward the promotion and adoption of the SPTF-CERISE Client Protection Pathway and Certification on client protection.
“Through today’s memorandum, five major priorities will be implemented, namely the harmonisation of the banking and financial sector code of conduct with the SPTF-CERISE consumer protection standards; training in and translation of consumer protection principles; capacity-building training for social-mission management; translation of the Universal Standards for Social and Environmental Performance Management [USSEPM]; and monitoring, coordination and advocacy,” he said.
SPTF director of responsible inclusive finance facility for Southeast Asia, Nitin Madan, said: “This new partnership, a first of its kind, will help chart a roadmap for responsible growth, financial stability and customer protection in Cambodia’s microfinance and broader financial sector.
“The CMA and its members can also apply for co-financing for implementing and strengthening capacity on responsible, inclusive finance practices of financial service providers in Southeast Asia,” he said.
National Bank of Cambodia (NBC) first deputy-director general for banking supervision, Kith Sovannarith, reflected on the overall progress of financial inclusion in the Kingdom, which he pointed out is exemplified in the increased use of non-cash payment media, formal credit, and deposit accounts.
However, he acknowledged the persistence of major issues hindering development in the microfinance sector and stifling progress on financial inclusion and consumer protection, citing undue confiscation of collateral, exaggerated or misleading advertisements, and general non-compliance with professional ethics.
This, he said, has eroded public confidence in the formal financial sector, leading many to turn to informal alternatives, putting them at higher risk of falling into significant debt problems or losing property as a result of fraud or unfair practices by nefarious actors.
He underscored that these issues could only be resolved through the concerted efforts of all stakeholders. “In this regard, I would like to encourage the Cambodia Microfinance Association and SPTF to continue to regularly monitor and evaluate the institutions … to ensure the stability of the implementation of responsible financial inclusion,” Sovannarith said.
According to CMA’s Voeun, non-bank members of the microfinance industry body have issued nearly two million loans worth a total of $8.355 billion as of March 31.
The association’s five microfinance deposit-taking institutions have more than 2.6 million deposit accounts holding over $4.400 billion, he said.
