Pricing Disclosure Policy Matrix

Pricing disclosure policy that considers all stakeholder perspectives and helps facilitate standardized pricing practices is crucial to developing a responsible microfinance industry. MFTransparency believes that a set of incentives and mandates working together will have more effect than one policy on its own. The combination of policies that will be most successful in implementing pricing transparency is different for every microfinance market. In all cases, stakeholders should have an opportunity to comment on proposed policies before they are implemented.

The attached briefing lists of policies that MFTransparency believes can be implemented to help create an enabling environment for pricing transparency in microfinance, including their strengths and weaknesses.

Transparency Mandates:

• Require APR/EIR to be published on the loan contract and/or on the repayment schedule
• Require pricing information to be submitted to the regulator on prices by product
• Post pricing information on a public site

Education:

• Provide training to MFIs on pricing calculations and ranges
• Provide training to clients on pricing and financial education
• Establish a dispute resolution mechanism for clients to report pricing abuses

Standardized Documentation:

• Standardize formats for loan contracts, repayment schedules and ways of charging interest and fees for most common loan types
• Outlaw the charging of flat interest rates

The briefing also contains a matrix specifying the countries that maintain Truth-in-Lending legislation.