The Central Bank of Nigeria (CBN) has directed banks and other financial institutions under its regulation to ensure that they respond to customers’ enquiries or requests within five working days of receiving such requests.
The Bank stated this in a new Guidelines on the, “Issuance of Consumer Protection Regulations,” posted on its website yesterday.
It also listed sanctions for banks that fail to comply with the new Guideline.
Furthermore, the central bank urged the banks to promptly oblige consumers’ request for account closure or to switch providers, without unreasonable closing/switching barriers as well as ensure that variations to contracts including interest rate, fees or charges are only made if expressly provided for in the contract and shall notify consumer of any such variation.
Also, in the circular, banks were asked to communicate their decision (acceptance or decline) on applications for waivers, extensions, and other concessions to a customer within ten working days, stating that otherwise the application shall be deemed to have been granted.
Bank were also advised not act in a manner that is inconsistent with the terms and conditions of their contracts with their customers; not seek repayment or withhold, in part or in full, customer’s funds to secure repayment before the due date, except with the written authorisation of the customer; and not charge early liquidation fees for consumer and SME loans with variable interest rate.
According to the CBN the penalties for violation of the Guidelines by Institutions shall be: Non-resolution of complaints within prescribed timelines – A penalty of N500,000 per complaint per week while the infraction subsists; for non-acknowledgment of complaints from customer or non-issuance of tracking numbers – N2,000,000 per complaint; and non-response to request or failure to comply with CBN directive -N2,000,000.
“False or non-rendition of Returns/Reports – N100,000.00, and in addition, N10,000 for each day the infraction continues. Persistent breach of regulations – Administrative sanctions on responsible officer(s), including issuance of warning letters and any other statutory sanctions on the officer(s) or Institution. These may be in addition to the sanctions prescribed in this section of the regulation.
“Failure to comply with other provisions of the Regulations not specified above shall attract sanctions provided in the CBN Act, the BOFIA, other enabling laws and regulations,” it stated.
It added: “Institutions shall, not later than three months after the issuance of the regulations, develop a policy approved by the Board of Directors that documents the processes, procedures and systems designed to ensure compliance with the provisions of the Regulations.”
In terms of unfair contract terms, it stated that contracts between institutions and consumers shall not contain unfair terms.
The central bank explained that contract terms shall be considered unfair where there is an imbalance in rights and obligations which are detrimental to the consumer.
To promote transparency and enhance disclosure practices, institutions shall, “ensure that documents provided or made available to consumers shall be written in clear, legible and simple English language and in a minimum font size of 10; provided in a durable form for future reference; state the name, contact details of the institution and the consumer; contain a statement that the institution is regulated by the Central Bank of Nigeria, and not misleading or deceptive.”