Banking Association and IFC Publish Code of Conduct for Debt Collection to Set Benchmark Standards

With 11 rounds of drafts and 400 contributions, the Code of Conduct for debt collection issued by the Vietnam Banks Association (VNBA) in collaboration with the International Finance Corporation (IFC) provides a framework to regulate conduct, helping credit institutions limit risk, protect their reputation, brand, and the legitimate rights of stakeholders. Speaking at the conference to implement the Code of Conduct for debt collection on April 21, Nguyen Quoc Hung, Vice Chairman and Secretary General of VNBA, said that although the State Bank of Vietnam has issued circulars regulating debt collection activities, the level of detail of specific conduct remains unclear. Therefore, the Code’s creation aims to fill this gap by providing a standard framework to regulate conduct and shape debt collection activities. The Code of Conduct for debt collection introduces four defining new points. First, for the first time the Code quantifies and confines the bounds of conduct. According to lawyer Nguyen Hung Quang, the Code is concise, with three chapters and 11 articles. Chapter 2 is entirely devoted to setting ethical and professional boundaries for each debt collection officer. The Code frames conduct within four core principles: compliance with the law; respect for customers’ rights and legitimate interests; protecting the organization’s image; and information security (absolutely no threats, insults, or extreme measures). This is the first time credit institutions have a common standard framework to reflect against. Although voluntary and not a replacement for existing laws, the Code acts as a “risk filter.” According to Nguyen Hung Quang, this will serve as a benchmark for banks to issue internal regulations, ensuring system-wide consistency and eliminating impulsive debt collection measures that could lead to public concern over the emergence of ‘black-market’ practices. Second, the Code injects humane values into debt collection. According to Nguyen Anh Tuan of Vietcombank, humane debt collection does not mean leniency toward defaulters, but a shift from confrontation to dialogue. Staff should approach root causes of debt, empathetically address cases where borrowers face natural disasters, illness, or family misfortunes, and may flexibly defer or reduce interest (as regulations allow) to encourage cooperation. Third, the Code aligns with global standards. Debt collection is not only an internal banking matter in Vietnam; IFC (World Bank group) and SECO provided technical support throughout the drafting process. The IFC expert stated that this Code is the first of its kind for VNBA members, and distilling over 370 contributions across 11 drafts helped embed best international practices into Vietnam’s context, enhancing transparency, professionalism, protecting financial consumers, and maintaining public trust—crucial for Vietnamese financial institutions’ global expansion. Fourth, the Code establishes a distinctive approach for consumer finance. While much debt at banks is secured, the Code also covers consumer credit (100% unsecured). HD SAISON’s representative noted that consumer borrowers are vulnerable but may actively avoid debt due to lack of collateral. The Code directs financial firms to be flexible and personalize outreach, with debt collectors mindful of contact times and handling third parties (colleagues, relatives) tactfully. The standard emphasizes not only legal compliance but how interactions are received by customers.