Banks, Microfinance Institutions Agree to Voluntary Standards

The majority of Cambodia’s financial institutions on Monday signed a nonbinding code of conduct that aims to increase customers’ awareness of their rights at a ceremony at Phnom Penh’s Intercontinental Hotel.

The standards relate to issues including privacy and information disclosure, such as a customer’s right to hold a private PIN number and to know the conditions of a loan.

A complaints committee, made up of a representative from the National Bank of Cambodia (NBC), the Association of Banks in Cambodia (ABC) and an independent individual, is also to be established to mediate disputes between customers and banks.

However, ANZ Royal Bank CEO Grant Knuckey said it would not be legally binding as there was no mechanism to enforce its decisions.

“If [banks] can’t show they are committing, that’s a moral persuasion,” he said.

Mr. Knuckey said the code would come into effect immediately and would be available to view on the website of the ABC this week and on banks’ websites in due course.

Twenty-eight of the country’s 47 banks signed the agreement on Monday, according to ABC general manager Kem Sambaddh, who said the others are expected to sign “very soon.”

NBC governor Chea Chanto described the agreement as “a key factor to build trust by financial service users.”

“Building trust takes time,” he said. “But is easily lost if a bad thing happens.”

However, Cambodia Microfinance Association president Bun Mony highlighted the limits of the deal in relation to some unlicensed microfinance institutions (MFIs), who he said were charging exploitative interest rates to uninformed customers.

“The new code does not impact them because they are not registered,” said Mr. Mony, adding that 80 percent of the 39 MFIs had signed up to the code so far.

The NBC, along with the ministries of finance and interior, have turned their attention this year to ridding the financial sector of unlicensed creditors, which they blame for bloated debt among the country’s poor.

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