Microfinance institutions should improve customer complaint handling mechanisms

By Bindhe Edward

Communications Specialist

UMRA

Complaint handling systems in any organization are key to promptly responding to customer concerns. Microfinance Institutions and Money lenders should have clear complaint handling procedures which should be included on their loans agreements.

There are numerous complaints filed against Non Deposit taking Microfinance institutions at the Uganda Microfinance Regulatory Authority (UMRA) some of which are so minor that they can easily be handled by the institutions. Those complaints are filed at UMRA because it is mandated to Regulate, License and Supervise all the tier 4 Microfinance institutions and money lenders in Uganda.

The tier 4 microfinance institutions include Non Deposit taking Microfinance institutions, Community based microfinance institutions, Self-help groups, Village Savings and Loans Associations- VSLAs and SACCOs in Uganda.

These institutions should have clear complaint handling systems in place to promptly respond to the concerns of their borrowers before they are leaked to the media. The problem with borrowers complaining to the media against the services of microfinance institutions is that their reputation will be jeopardized and hence the public will lose interest in the microfinance sector.

It is against this background that Microfinance institutions are encouraged to have internal complaint resolution mechanisms. Most common complaints range from continued deduction of salaries of borrowers especially amongst institutions that target public servants, over deductions, premature sale of collaterals, non-disclosure of key facts like interest rates, loan tenure, other fees involved, penalties involved in the case of late payments among others.

You realize that some of the complaints can be handled at the institutional level before they are referred to UMRA or even to courts of law. Let microfinance institutions and money lenders improve their customer care. These are their customers and therefore they must listen and resolve their concerns satisfactorily. This will create confidence amongst their services and promote financial inclusion.

Furthermore, Microfinance institutions and money lenders should work towards retaining customers instead of losing them due to failure to resolve their concerns. Let the customers leave their institutions satisfied. This will definitely force them to refer more customers to them for loans.