Microfinance Code of Conduct for Europe

November 17, 2011

The European Commission has published a set of guidelines that are intended to support more uniformity in microcredit initiatives across the continent.

The European Code of Good Conduct is not a replacement for established rules and regulations. Rather, it offers guidance, and is directed at micro-credit providers, investors, customers, partners and even regulators, the EU said. It is designed primarily to address non-bank providers of microcredit, which fall under numerous regulatory jurisdictions.

The Code, a 5-page tome, is divided into five sections addressing customer and investor relations, governance, reporting, management information systems and risk management. A sixth section addressing social 3and ethical issues will be added in 2012, the EU said.

"The development of the Code was based on the recognition that - in light of the disparate regulatory frameworks in which microcredit providers in the EU operate - there was a need for a unifying set of expectations and standards that was common to the sector," the publication states in its introduction. "The Code sets out good practice guidelines that will better enable the sector to face the challenges of accessing long-term finance, maintaining and raising the quality of services, and moving toward sustainability."

Only 3% of the total global need for microfinance is being met today

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