Resolving Perennial Excess Bank Charges

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Despite the clamour for financial inclusion and against agreed terms, deposit money banks have continued to visit their customers with outrageous charges, writes Ndubuisi Francis

On September 30, 2017, a  close friend, and bank customer, Hilary Chukwu (not real name), cried blue murder as soon as he received an alert indicating that he had been charged as much as N538.00 purported to be “account maintenance fee”, by his bank. 

Piqued by the outlandish charge on his roughly N70, 000 current account balance in the name of “account maintenance fee”, Chukwu saw this as not only fraudulent, but smacks of an attempt to rubbish the clamour for financial inclusion.

This ‘over-kill’ charge under the guise of a nebulous maintenance fee has become the lot of scores of bank customers daily, despite efforts by the CBN to check the sometimes amorphous and often unscrupulous charges many DMBs visit on their customers on daily basis.

After stopping the cost on turnover (COT) charges by banks January last year, the CBN had authorised the introduction of current account maintenance fee a few weeks later.  But this did not go down well with bank customers.

Speaking under the aegis of Bank Customers Association of Nigeria (BCAN), bank customers said the implementation of the fee would erode the confidence of bank customers in CBN as an unbiased regulator; affect negatively the budgets and other plans which had been prepared by customers on the certainty of a zero-COT regime.

It was this ‘current account maintenance fee’ that made Chukwu (referred to above) to express outrage after receiving an alert to the effect that N538.00 had been deducted from his current account balance of about N70,000.

 

Recovered Excess Charges

On February 28, 2016, the CBN announced that it compelled banks to return N6.2 billion excess charges to their customers in 2015 alone.

In announcing the development, the apex bank in a statement captioned “Alleged Excess, Illegal Charges by Deposit Money Banks (DMBs)”, said it “received series of complaints from customers of Deposit Money Banks (DMBs) alleging excessive and in some cases illegal charges from their respective banks.”

The CBN had said in the February 2016 statement: “The Revised Guide to Bank Charges clearly specifies allowable charges for all banking services and the CBN does not in any way condone the fleecing of banking customers under any guise.

“It was in the quest to provide a strong voice to banks’ customers and moderate the arbitrary charges that the CBN in 2012, established its Consumer Protection Department. For the avoidance of doubt, the CBN has investigated over 6,000 complaints relating to unauthorised bank charges brought to its notice, following which banks have been compelled to refund the sum of over N6.2 billion to affected customers in 2015 alone.

“The CBN wishes to reiterate its resolve to continuously enforce the provision of the Revised Guide to Bank Charges and urges members of the public to report cases of infringement to enable it investigate and apply sanctions on any erring Deposit Money Bank (DMB).”

Despite the efforts by the CBN to check the excess charges by the DMBs, recent developments seem to suggest that the banks are resolved to continue to fleece their customers under sundry charges, most of which are way above agreed and approved thresholds.

Precisely on October 4, 2017, CBN’s Acting Director, Corporate Communications, Mr. Isaac Okorafor, disclosed that the bank’s efforts to ensure that DMBs play by the rules were yielding significant dividends.

According to him, the apex bank had in three years recovered over N50 billion as excessive charges on bank customers by DMBs.

Okorafor, said the CBN was unrelenting in its resolve to ensure that excessive charges were stopped as the practice was against the campaign for banking inclusion and fair deal.

He urged the banking public to promptly report incidences of excessive charges, when discovered, to the Consumer Protection Department of the CBN, for action.

The apex bank, he said, had established the necessary mechanism to reverse every form of unwholesome practice by DMBs. 

Okorafor noted that the CBN had a Customer Bill of Rights and urged them to access the bank’s website and read up the “Guide to Bank Charges in order to know their rights with a view to guarding against being overcharged by banks.

But for emphasis, Okorafor reminded all that banks were not charity organisations, but profitable entities that survive through charges.

He, however, noted that in going about charging their customers for services rendered, such charges should fall within approved threshold.

It is important that the CBN has asked bank customers to always forward their complaints to the Director, Consumer Protection Department via email: cpd@cbn.gov.ng.

This window of redress has not been fully exploited by bank customers, who daily suffer one form of infringement or the other through excess charges.

The CBN may also not have carried out its enlightenment role well enough to intimate bank customers on approved charges and ways of seeking redress in the event of overcharge.

But it is gratifying that the apex bank had acted on reported cases of excess charges against DMBs.

Looking at the amount (N50 billion) said to have been recovered as excess charges in the past three years (2015-2017), it is deduced that a whopping N44.8 billion was recovered between 2016 and 2017 since the CBN had put recovered excess charges for 2015 at N6.2 billion.

Guide to Charges

The Guide to Bank Charges published by the CBN provides a standard for the application of charges on the various  types of products and services DMBs in Nigeria offer their customers, individuals, corporate organisations and governments at all levels.

According to the CBN, wide consultations with relevant stakeholders were considered in arriving at the charges prescribed in the guide.

The guide was designed to enhance flexibility, transparency and competition in the nation’s economy.

It stipulates that where a bank charge is stipulated as “negotiable”,  DMBs are required to appropriately draw the attention of their customers to it, and both parties  should mutually agree on the applicable charge. Although the guide also provides for charges on various products and services of DMBs, it is not exhaustive .

Banks are mandated to present any new product, service and charges not covered by the guide to the CBN for prior approval.

Some DMBs run afoul of this, rather opting to introduce and overcharge their customers, many of who are ignorant of their rights, display a form of apathy or both.

 

Different Charges

There are different charges/fees approved by the CBN such as interest on deposit as well as interest rates/lending fees. Interest on deposit includes current account in credit balance, which has a ‘negotiable’ charge.

Others are savings deposit account, term deposit account, domiciliary account, current account, savings account and deposits held on collateral. Charges on virtually all these accounts are classified as ‘negotiable’.

But how much of negotiations the DMBs carry out with their customers before embarking on  what has resulted in outrageous excess charges is better imagined.

That the DMBs have also embarked on these excess charges in clear breach of extant provisions leaves much to be desired.

It is not enough for the CBN to recover excess charges, ensuring that these breaches are not allowed is more potent. Above all, defaulting banks should be made to face serious sanctions, while more enlightenment campaigns should be put in place for bank customers.