Developing common standards: European Code of Good Conduct for Microcredit Provision

Published on 16 July 2015

The European microcredit market is a young and growing sector which is quite heterogeneous due to the disparity of the legal and institutional frameworks in the Member States and the diversity of the microcredit providers. As a consequence, lending practices in microcredit vary considerably.

The Commission has developed the European Code of Good Conduct for Microcredit Provision with the objective of setting out good practice guidelines that will better enable the sector to face the challenges of accessing long-term finance. Signing-up to (for non-banks) or endorsing (for banks) the Code is a pre-condition for benefitting from the EaSI Technical Assistance offered under fi-compass and EaSI Financial Instruments.

The Code contains a set of clauses which microcredit providers need to implement in five different areas: Customer and Investor Relations, Governance, Risk Management, Reporting Standards and Management Information Systems. In order to achieve compliance with the Code, microcredit providers also need to disclose various data linked to their financial and social performance.

EaSI-MicPro has been developed by the Commission specifically to allow microcredit providers to easily present information as required by the Code. In addition, it enables micro-entrepreneursto easily access information on microcredit providers in their country or region. Investors and funderswill also find this database useful should they seek assurance that a particular microcredit provider operates with transparent and pan-European reporting standards.