How to Develop an Institutional Code of Ethics
The Smart Campaign's client protection principle on fair and respectful treatment of clients encourages financial service providers to treat clients with fairness and respect and to ensure that measures exist to detect and correct corruption and abuse, particularly during the credit sales and collection processes. An institutional Code of Ethics helps employees practice fair and respectful treatment of clients by defining clear standards of ethical behavior that they must uphold. A written Code does not ensure ethical conduct, but it is the first step toward creating an ethical organizational culture. In other words, establishing high standards of ethical employee behavior is a two-part process. First, the institution defines standards of behavior and second, those standards are brought to life throughout the institution. This guide will focus on the first part of the process - defining standards of behavior through a formal Code of Ethics. Most MFIs already have a Code of Ethics, but many of these Codes are not "living" documents that carry significance within the organization. This short guide provides concrete suggestions for creating or remaking an institutional Code of Ethics. The process is divided into three phases:
- Formation of a Code of Ethics committee;
- Drafting and reviewing the Code;
- Institutionalizing the Code.
The guide also provides real examples from the field for each of these phases.