Several times, you must have heard about human rights and related it to freedom or access to certain things. While you may have been correct, it extends toward other things, such as protecting human needs and personal security. In fact, many industries, including the finance sector, address human rights concerns because it is one of their many responsibilities.
Our partnership with the finance expert at PaydayBears, Kara Johnson, has made us discover the various human rights associated with the finance sector. He expressed how the industry respects human rights by implementing certain policies or measures to allow people to borrow money. He added their organization’s specific requirements for providing short-term and long-term loans to clients.
As many would often say, it is advisable to know your rights so that you don’t find yourself in an uncomfortable situation where you cannot defend yourself. If you want a loan, you should know popular human rights risks in the financial sector. Find out what experts have to say in this article.
See below for the top 5 human rights risks in the money sector.
Stringent Lending Processes
One of the major risks you face as a borrower is the stringent loan processes by certain providers. The organization decides whom they approve short-term or long-term loans, which they often do by considering factors such as credit score, collateral, age, employment history, etc.
Although lending practices vary from organization to organization, it remains a risk, and most low-income earners may not meet these requirements. More so, some lenders use system algorithms and models that make accessing these loans difficult for certain people. In another case, the lending organization could deny people based on personal preference.
Poor Client Verification
Apart from the stringent lending processes, another potential risk to human rights is poor customer verification procedures. Generally, lending institutions take time to verify to whom they give out loans. However, they are not always thorough, especially when it is a large corporation.
Unknowingly, such a corporation may be a business that abuses human rights or exploits its employees, and providing them with loans is just financing more violations.
Therefore, conducting due diligence is important. Through this action, the loan provider will understand the company’s work structure and services and build a good relationship with mutual benefits.
High-Level Corruption
Another major risk in the financial sector that poses a threat to human rights is high-level corruption. Oftentimes, it happens within government systems or levels. For instance, lending institutions quickly finance faux government projects rather than provide funds for basic human rights, such as healthcare, housing, or education. Providing funds to corrupt politicians for personal use indirectly impacts the masses, especially those in highly undeveloped areas.
Likewise, there is the place of bribery that also influences corruption. The impact of the duo cannot be overemphasized.
However, if the financial sector can get detailed information and supervised control over funds usage, there is the possibility to obtain a form of transparency without negatively impacting people’s rights.
Data Breach
Another main problem that financial institutions have had to deal with is data breaches. On several occasions, cases of data breaches have been reported, violating human rights. Some companies that have stored people’s financial data haven’t been perfect.
For instance, some loan providers use old systems and security protocols and hire staff who mishandle financial information. However, the best solution is to invest in constant system upgrades to avoid disclosing sensitive customer information.
General Discrimination
Finally, there is general discrimination with lending institutions. Apart from getting rejected due to the system’s algorithm, there is a violation of human rights when the company decides who gets the loan based on race, age, or gender.
For instance, studies show that women are always disadvantaged in the financial industry, with cases of sexual harassment and discrimination reported. These problems must be addressed through strict policies and workshops to give everyone an equal advantage in exercising their human rights.