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Microfinance Consumer Rights

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Project Background

Access to information is fundamental to improving the rule of law in Cambodia, as it provides the knowledge that is necessary for individuals to assert their legal rights and improve their social outcomes. This is particularly pertinent in Cambodia’s microfinance industry where the general population is inexperienced with financial institutions and largely unaware of their consumer rights. The risk of marginalisation, economic hardship and rights abuses occurring in this industry is especially pronounced, as the majority of Cambodia’s microfinance consumers are either women or people from rural areas.

In recent years, microfinance in Cambodia has expanded to comprise 37 licensed microfinance institutions (MFIs) and 2 rural credit operators, who serve 988,428 accounts that amount to a gross outstanding portfolio of USD $1.2 billion. While research suggests that microfinance has impacted 3,878,618 Cambodian people, over-indebtedness remains high because people are either unaware of their legal rights or are confused by their financial and legal obligations due to inexperience. In a similar vein, the United Nations Development Business (UNDB) has also warned that the country’s poor are vulnerable to microfinance indebtedness during a crisis and requested that the industry provide greater advice on microfinance products.

By improving access to readily understandable information on microfinance and related laws and regulations in Cambodia, society will be better able to achieve a fair and equitable economic landscape in which human development can prosper.

Ignorance of the law often leads to individuals and communities failing to assert their legal rights and can lead to increased vulnerability to abuse of rights, corruption and an unhealthy economic environment. Universal access to the law and increased knowledge of rights, obligations and regulatory frameworks is an essential component of a fair and equitable society in which democratic governance and a fair and responsible financial community can flourish.

The Microfinance Consumer Rights Project project aims to provide legal and regulatory resources presented in an accessible way and targeted primarily at consumers. The information to be disseminated will be gathered and presented on an easy to access website page and then presented to a range of consumers at a series of roadshows. All information will be reproduced in the form of fact sheets and information leaflets that will be distributed to participants at each of the roadshows. The information will be geared towards providing consumer advice to ensure that citizens have the requisite knowledge to make informed decisions when taking out personal finance; the information will include topics such as laws, regulations, credit scores, how to access credit information and available avenues of recourse in the event that the incorrect credit information has been recorded.

Destination Justice has past experience in researching and disseminating legal and regulatory information; we have already launched a website that functions as a database for Cambodian laws and regulations (for more information, visit www.chbab.net). With a skilled in-house IT background and an experienced set of international and Cambodian researchers, Destination Justice is able to provide a useful, unique platform from which to build the roadshows. 

Objectives: In order to foster an environment of sustainable and socially responsible investment and growth, the project aims to increase public awareness of the nature of microfinance and consumer rights and, in turn, improve the service level in the industry. The project aims to provide a useful educational service to citizens who live in provincial areas and, as such, may not have access to the internet, as well as making the educational material available online for those who are able to access it.