october 2011 client protection session planet rating 44 rue de prony, 75017 paris france tel : 33 1...
DESCRIPTION
2 October 4 th, nd AMFA Fair Analysis of client protection in our ratings Social Rating Domains Weight 1. Social Performance Management25% 2. Financial Inclusion25% 3. Client Protection30% 4. Human Ressources Policy20% 5. Social ChangeNotch up Rated in social ratings since 2007; emphasized since January Appropriate product design and delivery - Prevention of Over-indebtedness - Responsible pricing - Transparency of pricing - Privacy of client data - Fair and respectful treatment of clients - Mechanisms for complaint resolution Grids of analysis of client protection principles in line with those defined for the SMART campaignTRANSCRIPT
OCTOBER 2011
Client Protection session
Planet Rating44 rue de Prony, 75017 Paris France
Tel : 33 1 49 21 26 30 – Fax : 33 1 49 21 26 27
[email protected] – www.planetrating.com
Presented by: Edouard Sers, Expert Analyst [email protected]
The perspective of a microfinance rating agency
2nd Azerbaijan Micro-finance Investor Fair
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October 4th, 2010 2nd AMFA Fair
Role as a microfinance rating agency
Providing the information needed for a sound development of the sector by facilitating the development of relationships between MFIs and their partners
MFI Funder
Rating Agency
Provide a detailed second
opinion; report designed to meet the specific
needs of funders
On-site 5 to 7 days evaluation mission
Social Ratings provide an opinion on the level of compliance with each of the client protection principles
Opinion of the funder based on due
diligence and/or desk review
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October 4th, 2010 2nd AMFA Fair
Analysis of client protection in our ratings
Social Rating Domains Weight1. Social Performance Management 25%2. Financial Inclusion 25%3. Client Protection 30%4. Human Ressources Policy 20%5. Social Change Notch up
Rated in social ratings since 2007; emphasized since January 2010
- Appropriate product design and delivery- Prevention of Over-indebtedness- Responsible pricing- Transparency of pricing - Privacy of client data- Fair and respectful treatment of clients- Mechanisms for complaint resolution
Grids of analysis of client protection principles in line with those defined for the SMART campaign
4
October 4th, 2010 2nd AMFA Fair
Context Microfinance crises have shown that the performance of MFIs could be impacted by
factors that are more closely looked at in Social ratings than in current financial ratings. Direct correlation between Client Protection and long term Portfolio Quality The reputation of some actors (and thus of the sector), has also been affected by
management practices considered not to be in accordance with the claimed social goals
Through its GIRAFE ratings, Planet Rating aims at providing an opinion on the long term sustainability of MFIs.
The responsible financial rating therefore includes Client Protection and Social Performance Management factors.
Analysis of client protection in our ratings
Included in our pilot Responsible Financial Rating
Responsible Financial Rating
Weight
Governance 22%I nformation 9%Risk 9% + capActivities 18%Funding & liquidity 14%Efficiency & profitability 18%Client Protection 10%+cap
5
October 4th, 2010 2nd AMFA Fair
Simple Social Performance Rating Scale
5 - Advanced
4 - Convincing
3 – In Progress
2 - Incipient
1 - Intangible
0 - Negative
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October 4th, 2010 2nd AMFA Fair
Observations from our database of ratings
Client Protection Principles are being implemented in more than 70% of the rated MFIs, but with important room for improvement in 50% of the cases (database for 75 ratings)
71%
7%
21%
49%
21%
1%
0%
10%
20%
30%
40%
50%
60%
Intangible Incipient In progress Convincing Advanced
Client Protection grades
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October 4th, 2010 2nd AMFA Fair
Observations from our database of ratings
Compliance with Client Protection Principles is highly correlated with institutional performance
y = 0.7055x + 0.615R² = 0.472
0
1
2
3
4
5
Clie
nt P
rote
ction
Gra
des
GIRAFE grades
0
1
2
3
4
5
E D C B A
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October 4th, 2010 2nd AMFA Fair
Observations from our database of ratings
Compliance with Client Protection Principles is not correlated with ROA
y = 0.2615x + 1.9403R² = 0.2815
0
1
2
3
4
5
Clie
nt P
rote
ction
Gra
des
ROA
0
1
2
3
4
5
E D C B A
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October 4th, 2010 2nd AMFA Fair
Observations from our database of ratings
Compliance with Client Protection Principles is highly correlated with Governance
y = 0.5961x + 0.9322R² = 0.309
0
1
2
3
4
5
Clie
nt P
rote
ction
Gra
des
Governance
0
1
2
3
4
5
E D C B A
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October 4th, 2010 2nd AMFA Fair
Observations from our database of ratings
Other preliminary observations
High correlation observed between Client Protection and… Regulation Governance Social Performance Management Financial Services Management Funding Strategy
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October 4th, 2010 2nd AMFA Fair
Thank you ! Teşekkür edirem !
Questions and Answers
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October 4th, 2010 2nd AMFA Fair
Contacts
Global Headquarters44 rue de Prony75017 Paris – FranceTel: +33 1 4921 2630Fax: +33 1 4921 2627
Latin AmericaFrancisco de Paula Ugarriza 813 – Oficina 301Miraflores, Lima 18 – PeruTel: +51 1 242 4597Fax: +51 1 242 4597
Asia444 EDSA 21st floor, Guadelup Viejo1211 Makati, Manila – PhilippinesTel: +63 907 385 0035
Middle East & North AfricaPiccadilly Bldg #407Hamra Street Beirut – LebanonTel: +961 1 35 32 10
West Africa & Central Africa
Immeuble Sokhna Astou Lo4ème étage – Sacré Coeur 2BP 5695 Dakar – SenegalTel/Fax: +221 33 825 75 40
East Africa & Southern AfricaShelter Afrique House – Mamlaka RoadPO Box 16658, 00100 Nairobi – KenyaTel: +254 20 271 42 20
www.planetrating.com - [email protected]