WOCCU Adopts International Credit Union Consumer Protection Principles
Efforts Extend to Workgroup Participation with Other Microfinance Agencies
October 06, 2008
MADISON, Wis—This summer, World Council of Credit Unions (WOCCU) members solidified their commitment to credit union members worldwide by adopting the International Credit Union Consumer Protection Principles. WOCCU recently went the next step to pilot the principles with select credit unions and participate with other leading microfinance agencies to assure equitable lending and savings practices gain global acceptance.
The International Principles, approved in July by the WOCCU General Assembly in Hong Kong, is the latest in a series of international credit union guidelines issued by the organization. The nine principles are designed to supplement rather than supplant local regulatory requirements and prudential standards, offering "best practice" models for serving credit union members, according to Dave Grace, WOCCU's vice president of association services.
"Credit unions around the world exist to serve their members, but not all members are served equally," Grace said. "Credit union members worldwide have the right to expect fair and ethical treatment delivered with a high degree of honesty and integrity. WOCCU's principles outline standards for ethical member service applicable to all credit unions wherever they are located."
The nine principles were developed over the past two years through a participatory process with WOCCU's members and global experts on consumer protection. The principles form the cornerstone of WOCCU's efforts in Kenya, Mexico and the Philippines, where credit unions are piloting a program that assesses credit union performance against the principles and implements changes where gaps exist. The initial program should take six to nine months to complete. Pilot program results will guide application of the principles among credit unions in other countries, Grace said.
WOCCU also is participating in a work group under the auspices of the Center for Financial Inclusion at ACCION International, a Boston-based microfinance organization. In addition to Grace and representatives from credit unions piloting WOCCU's principles, participants in the group include Deutsche Bank, the Consultative Group to Assist the Poor (CGAP) and other organizations. The work group as a whole will take a broader look at financial service conditions in developing countries, but WOCCU's efforts will focus solely on credit unions, Grace explained.
"The Consumer Protection Principles were approved during a time when credit union systems in WOCCU member countries like Australia and Ireland were examining their own codes of conduct, and in the wake of a U.S. economy reeling from a subprime mortgage crisis caused by financial institutions clearly not operating in consumers' best interests," Grace said. "We're confident results from our pilot studies will show that serving members ethically and honestly is simply good business."
WOCCU's International Consumer Protection Principles address the following issues:
Disclosure of rates and fees: Credit unions shall present savings and share fees and interest and dividend rates clearly and in writing to members prior to completion of any transaction.
Periodic statements: Credit unions shall distribute comprehensive member statements disclosing loan and savings balances, rates, fees and finance charges on at least a quarterly basis.
Honest and non-deceptive promotions: All marketing and advertising shall contain honest and relevant information to help members make informed decisions.
Fair credit practices: Credit unions shall provide members with accurate, comparable, transparent and complete information about the total cost of loans, including fees and commissions as required under applicable law.
Dignified collection practices: Credit unions may exercise persistent collection practices as needed, but shall not harass nor physically or verbally abuse members in the process.
Members' consent to share information: Credit unions shall provide members with the option of not having their personal information shared with third parties for the purpose of selling members products or services.
Dispute resolution services: Credit unions shall provide members with options to settle disputes with the credit union to augment options offered through the legal system.
Provide education about thrift and wise use of credit: Credit unions shall educate and provide members with tools describing how to accumulate wealth and use credit wisely.
Fair and forthright conversions: Credit unions seeking to demutualize must have at least 30% of members directly vote on the issue, with 75% voting in favor of demutualization.
For a complete copy of WOCCU's International Credit Union Consumer Protection Principles and operating, governance and safety and soundness principles for credit unions, visit www.woccu.org/bestpractices.
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 60,500 credit unions in 109 countries serve 223 million people. Learn more about World Council's impact around the world at www.woccu.org.