Description of a Smart Certification
Description of Smart Certification: A Smart certification is an independent, third-party evaluation to publicly recognize financial institutions that meet adequate standards of care to implement all of the Client Protection Principles throughout their operations, product offerings, and treatment of clients. Those principles are:
1. Appropriate product design and delivery
2. Prevention of over-indebtedness
3. Transparency
4. Responsible pricing
5. Fair and respectful treatment of clients, staff ethics, and non-discrimination
6. Privacy of client data
7. Mechanisms for complaints resolution
The Certification program was developed through several years of industry collaboration and input, managed by the Smart Campaign. To be certified, a financial institution needs to comply with the indicators corresponding to the 30 adequate standards of care for client protection. A financial institution will be evaluated through a streamlined desk review and on-site due diligence process that will include staff and client interviews and feedback. Financial institutions will be asked to share key documents with the Certification team. Fieldwork will be scheduled only if the financial institution has submitted all the required information and is responsive to the certifiers’ questions.
To get ready for a Certification, the Smart Campaign recommends that your institution conduct an internal review of its own practices against the Certification standards, which are publicly available on the Smart Campaign website.The Getting Started Questionnaire tool is a good starting point for this purpose. If your institution needs to upgrade its practices before trying for a Certification, it may wish to obtain an assessment from one of the trained, accredited assessors, or apply one of the Smart Campaign tools.
Organizations passing all the required standards will be able to describe themselves as Certified and will be listed on the Smart Campaign website. Organizations not passing will be kept confidential, allowed to try again, and, if desired, the Certification team will advise them on steps to improve their practices.
Eligibility for Smart Certification
Retail financial institutions that provide services to the lower segments of the market and/or financially excluded populations are eligible for client protection certification. This includes institutions of any legal form: bank, finance company, NGO, credit union, etc.
Time required for a Smart Certification
The document review typically takes two analysts two to four days. The field review typically takes four to five days. Several weeks after the field mission, the Certifier will share his/her determination with the financial institution on whether the institution has passed or failed.
Licensed Certifiers
The Smart Campaign has licensed specialized microfinance rating agencies to conduct Smart Certifications. These agencies are M-Cril, MicroFinanza Rating, MicroRate, EBS Advisory, SAWAY, and Inclusion [Social Ratings].
Cost
The exact cost of Certification will vary by location and is a matter of negotiation between the licensed certifier and the requesting organization. Previous experience indicates, however, that the cost is unlikely to exceed US$18,000. Once you and your licensed certifier determine the exact cost for your particular institution's Certification, you will submit that budget to the RMF along with this application. The RMF will co-finance 50% of this cost.
RMF procedure to disburse co-financing grant
The RMF will not disburse the co-financing grant to an institution on the date when its application is approved. Instead, it will wait until the institution begins paying for, or using in-kind contribution to implement, its 50% share of the cost. This is to avoid problems that might occur if the RMF contributes 50% but the financial institution is ultimately not able to contribute its 50% share of the cost. Additionally, RMF will pay third-party vendors directly. This means that a portion, or all, of the co-financing may be paid directly to a third party instead of deposited in the account of the institution. In cases where it is not possible for the RMF to pay third-party vendors directly, the institution may pay those vendors directly and then submit receipts to the RMF for reimbursement.
Length of time that a Certification is valid
Certification is valid for two years, and only during that time will an organization be able to describe itself publicly as "Smart-Certified." After this, a new Certification would be obtained by the financial institution.
Difference between a Smart Assessment and a Smart Certification
The assessment is a diagnostic tool that institutions use to analyze their implementation of the Client Protection Principles, identify strengths and weaknesses, and take steps to improve accordingly. Certifications are a way to demonstrate the institution's achievement of adequate client protection practices to external audiences. Financial institutions will use the certification results to market their organization as a pro-client institution to their investors, clients, funders, regulators and the general public. Investors and donors will use the certification results to inform their investment and funding decisions. Some investors will require certification during a reasonable time prior to or after the investment.
Language
The specialized rating agencies are able to conduct Smart Certifications in a wide variety of languages. This application form will ask you for your preferred language.
Certification start date
To be determined. The questions below in this application form ask you for your preferred start date to get certified, and also to describe any time constraints you have. The RMF will review applications and do its best to make grants at a time that fits your schedule.
Deadline to submit application
None. RMF accepts applications on a rolling basis.
To learn more about Smart certifications, please visit the FAQ page on the Smart Campaign website.