Prevent Over-Indebtedness, Strengthen Digital Literacy and Financial Awareness

Potential Actions for Signatories are based on recent industry examples, and are not intended to be used as a compliance checklist given digital financial services standards are still evolving.  Rather, examples of potential actions should be used for a more comprehensive due diligence assessment, and an opportunity for Signatories to develop new products and solutions for customers. Signatories may test, refine and adapt current industry evidence so as to be more relevant to their digital financial services investments, business models, market context, among other factors.
Examples of potential actions:
  • Encourage and support investees to proactively educate customers about pricing with the objective of
    promoting financial literacy, meaningful comparison and informed decision-making.
  • Encourage and support investees to make lending decisions on the basis of the customers’ repayment capacity
    and to ensure that customers are only encouraged to borrow when they have a real need.
  • Raise awareness among investees and their staff about the quantitative and qualitative aspects of a definition
    of over-indebtedness. A qualitative definition includes a state in which a consumer has to make significant
    sacrifices to his or her standard of living or business to repay debts.
  • Encourage and support investees to innovate and test new ways of educating customers about “credit history”,
    enable customers to check their personal credit history and apply positive framing of credit history, i.e.
    highlighting that a good repayment track record is key to accessing future loans.
  • Work together as a group of investors and with DFS providers to develop innovative credit bureau solutions,
    which encompass all possible sources of debt and include new valuable consumer data such as mobile money
    and payment data.
  • Encourage investees to promote information sharing among providers to protect customers against overborrowing.
  • Promote, request and support ethical collection practices and responsible credit reporting.