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Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO)

PRI reporting framework 2020

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PIIF Principle 2: Client protection

IFD 11. Public endorsement of the Client Protection Principles

Possible action: 

Publicly endorse the Client Protection Principles (CPP).

11.1. Indicate if you have publicly endorsed the Client Protection Principles.

11.2. Additional information. [Optional]

FMO signed up for the SMART Campaign and endorses the Client Protection Principles.

IFD 12. Provide training and assistance for investees implementing the Client Protection Principles

12.1. Indicate if you provide training or assistance for your investees in implementing the Client Protection Principles and/or other client protection measures.

12.2. Additional information.

The CPPs aim to facilitate a risk-based assessment of financial institutions, non-banking financial institutions and corporates providing finance to natural persons. CPPs define the minimum standards that end-clients should expect to receive when doing business with an entity providing financing to natural persons. FMO contractually agrees ESG conditions and reporting requirements with its clients; these ESG conditions could include implementation of a Consumer Protection Principles Action Plan (CAP). FMO uses capacity development funds to conduct CPP assessments and draw CPP action plans through external consultants.

IFD 13. Include the Client Protection Principles in investment policies

13.1. Indicate if you include the Client Protection Principles and/or other client protection measures in your investment policies.

13.2. Indicate if this is systematically applied.

During due diligence

In covenants in loan agreements and/or in financing or shareholder agreements

13.3. Indicate if you encourage investees to apply for Client Protection Certification. [Optional]

13.4. Additional information. [Optional]

FMO has embedded a CPP assessment in its investment process whereby high risk clients are identified early on (all clients rated on a risk scale ranging from A, B, or C). Depending on this risk category, extra attention is dedicated during Due Diligence on CPP issues, consultants are hired to do a CPP assessment, and in some cases a CPP action plan is drafted. The process is systematic and is applied uniformly to all new investments in financial institutions, investment funds, and holdings. FMO continues to refine and expand its approach to Client Protection. Client protection issues extend beyond the financing of financial institutions, for example in off-grid energy solutions.

In a few cases in the past, FMO has used margin reduction incentives for CPP implementation.
FMO occasionally resorts to Client Protection covenants or clauses in shareholder agreements, but these are not core tools that the bank uses to address client protection.