European Code of Good Conduct for Microcredit Provision

European Code of Good Conduct for Microcredit Provision

Due to a significant diversity of microfinance providers in Europe the European Commission has developed the European Code of Good Conduct for Microcredit Provision.

Diversity of microcredit providers

The European microcredit market is relatively young and growing sector where lending practices vary considerably from one country to the next. Purpose of the code is to set out good practice guidelines and to better prepare the microfinance sector to face the challenges of accessing long-term financing. The Code of Conduct takes into account the diversity of microcredit providers in the EU in terms of different market conditions, institutional forms and legal frameworks.

Raise industry standards

It was developed in close consultation with members of the microfinance sector in the EU in order to raise industry standards and introduce best practices based on realistic operational expectations of the providers and will benefit both funders, investors, customers, owners, regulators and partner organisations. Qredits was one of the participants in designing the code along with other practitioners, banks, regulators, and funders and has participated in the first pilot phase. Compliance with the Code will be a pre-condition for benefitting from the EaSI Technical Assistance offered under fi-compass and EaSI Financial Instruments.

Clauses to implement

The Code contains more than 170 clauses which microcredit providers need to implement in five different areas: Customer and Investor Relations, Governance, Risk Management, Reporting Standards and Management Information Systems. In order to achieve compliance with the Code, microcredit providers also need to disclose various data linked to their financial and social performance.

Qredits 1st MFI to reach full compliance

In December 2016 Qredits was the first MFI to receive the award certificate for compliance with the European Code of Good, making Qredits a best practice example in Europe.

European Code of Good Conduct for Microcredit Provision