Aiming to instill greater confidence in Cambodia’s finance sector, the industry’s lead body released a set of best practices yesterday that encourages financial institutions to be more transparent with their customers.
From clarity surrounding simple account opening procedures to guidelines governing advertising material and information about privacy rules concerning customer data, the “Code of Banking Practices” details a wide range of standards that both banks and microfinance institutions should employ to strengthen consumer protection in the sector.
“An effective banking system is a partnership between the financial institutions and their customers,” said Pung Kheav Se, Chairman of the Association of Banks in Cambodia.
“Under the terms of the Code of Banking Practice we not only outline the banks commitments and responsibilities, but we also make it clear that customers have responsibilities around accuracy of their disclosures to the banks when securing a loan, for example,” he said during a signing ceremony for the code in Phnom Penh yesterday.
A number of Cambodian financial institutions, led by Canadia Bank and microfinance institution Sathapana Limited, were on hand to sign up to the voluntary code yesterday, with all firms operating in the industry encouraged to do so in the future.
Although it is not a regulatory requirement to sign-up to the intiative, the Association of Banks in Cambodia will this year consider a mechanism of “self-audit” whereby firms demonstrate how they are adhering to the standards they have agreed to.
“Building confidence is a longtime process, but it can be easily destroyed in a very short term if a bad thing, or even a small thing, happens to the banking system,” said Chea Chanto, governor of the National Bank of Cambodia.
“I hope that the code of banking practices will protect our consumers, improve the consistency in banking operations, enhance transparency, develop better and more mutual relationships between customers and financial institutions, increase public confidence and promote an equitable corporate culture for banking and financial institutions,” he added.
The initiative also sees the establishment of a Complaint Committee, whereby customers can raise a dispute they have with a financial institution, but only after the bank or MFI’s own processes for complaint resolution has been exhausted.
The new code of standards will be distributed in banks and MFI branches as well as on industry websites and will be made available to customers on request.
The set of practices will be continually updated as the sector becomes increasingly sophisticated, industry representatives said yesterday.