Front Office Services Activity (FOSA) – What Are they
Front office services activity has a wide reach in countries like Kenya where there a huge savings and credit society movement also known as SACCO
History of Front office services Activity
Traditionally Savings and Credit Societies facilitated provision of affordable loan facilities to its members. Majority of these Savings and Credit Societies usually loan their members three times the shares they hold with the society. These types of loans are categorized as school fees loan, emergency loans or quick loan and development loans. The loan repayment period is usually between twelve and thirty six months.
The idea of Front Office Services Activity was birthed in these Savings and Credit Societies. AT that time, banking services were out of reach for the middle and low class income earners due to the high account maintenance commission and minimum account balance.
The main purpose of this Front Office Services Activity was to enable members open accounts and operate them. Even though this was a good idea there are some un-scrupulous members of Central Management Committee membership who were determined to swindle their members of their hard earned income through this Front Office Services Activity.
Challenges of managing front office services activity
Front office services activity is a savings and deposit taking enterprise. this attracts unscrupulous people. They are supervised by the Ministry of Co-operative Development. The Ministry does not have or seem to have capacity to adequately supervise the FOSAs.
Due to loopholes created by inadequate supervision, corrupt Committee members embezzle funds from the front office services activity account-holders’ savings accounts.
Central Management Committee members are elected into office. Majority of them do not have qualifications to manage this Front Office Services Activity.
Measure that can used to protect front office services Activity members
In order to protect members deposit and save the Front Office Services Activity, the following should be put in place:
- A regulatory body should be establishing to monitor the activities of each Front Office Services Activity. This body should also vet the Savings and Credit Societies who intend to start offering these services.
- Qualified personnel should be engaged to effectively run these services. These staffs will be tasked with making sensible business decisions, formulating policies and controls, and taking responsibility of financial performance of the front office services activity.
- The deposit protection fund should be expanded to include the front office services activity, to protect the members from losing their hard earned monies.
- The services of independent auditors should be obtained as opposed to the Ministry of Co-operative Development auditors. Final accounts should be availed to all members and the public at large.
- A Board of Management should be constituted to ensure that the Front Office Services activity are professionally managed.
The critical role played by front office services activity in the economic development should be recognized and encouraged. Countries should adopt this kind of banking channel to ensure financial inclusion for its poor and marginalized citizens. Front office services activity could be considered as a type of Agency banking.