Unending customers exploitation
CBN Begins Fight Against Illegal Deductions
As cries over sundry charges by deposit banks continue unabated, the Apex bank, Central Bank of Nigeria (CBN) has urged aggrieved bank customers to direct any case of illegal charges to it for investigation.
This development came amid another directive that the banks should refund all illegal deductions, in the name of charges to their customers, as a lot of the allegations had been investigated and found to be true. The apex bank said commercial banks had since refunded over N6.2b to their customers.
There are no fewer than 10 identifiable charges associated with banking activities. They include maintenance fees, which banks are now charging on monthly basis on current accounts.
Newer complaints have also emerged that some banks now charge maintenance fees on savings products. There is also the Value Added Tax (VAT) charged virtually on every fee against bank customer, including the SMS alert charge.
There are also charges for online transfers; over-the-counter, as well as mobile App; Remote-on-Us (charges incurred for using other banks’ ATM to withdraw money more than three times in a month); and the recently introduced stamp duties charge.
Some banks have also reviewed upwards the cost of acquiring cards from N600 to N1000, with a VAT charge afterwards.While these charges appear seamless to banks, customers have been grumbling ceaselessly, bringing to the fore questions about how the subsisting guidelines, which the CBN reviewed recently, did not give room for the emerging charges.Perhaps, some of these charges could also be labelled illegal depending on the reasons advanced.
But the Director of Corporate Communications Department, Central Bank of Nigeria, Alhaji Ibrahim Mu’azu, said the solution to stemming the assessed excesses of banks is to alert the CBN through its Consumer Protection Department at firstname.lastname@example.org
“It was in the quest to provide a strong voice to bank customers and moderate the arbitrary charges that the CBN in 2012, established its Consumer Protection Department,” he explained.
The CBN, as the financial industry regulator, has spoken in clear terms: That over 6000 complaints from customers have revealed an estimated N6.2 billion illegal charges and withdrawals by banks, which is worrisome. Who knows, a closer examination could expose further illegality and increase the amount.
To better understand the situation leading to the need for the refund, the apex bank’s Director of Banking and Payments System Department, Dipo Fatokun, affirmed that there were 162.6 million transactions across all payment channels worth N48.9 trillion processed in 2015.
The Bank Verification Number (BVN) initiative as at February 7, 2016, has identified a total of 23.4 million unique customer accounts, with account linkage at 28.3 million. This means that there are about 51.7 million active accounts already captured by the scheme. These also show huge opportunities for banking transactions and that of legal and illegal charges and deductions by banks.
Since the enforcement of the Treasury Single Account (TSA), the banking industry has appeared unsettled, as well as desperate in the search for profit through conventional banking practices, since the easy access to cheap and zero-cost funds, belonging to government were withdrawn.
The situation toughened, as the financial system regulator embarked on monetary easing, which reduced the cost of borrowing and by implication, reduced the interest earning capacity of banks, with some debtors renegotiating downward their interest rates on loan, given the adjusted Monetary Policy Rate to 11 per cent from 13 per cent.
Still, the commencement of the zero Commission on Turnover (CoT)in January 2016 further sapped the non-interest earnings’ portfolio of banks and created more panic in the industry.Barely six weeks after its introduction, banks rolled out multiplicity of charges that affected customers.
Recognising the likely panicky reaction to the zero CoT policy, the CBN reversed its decision by approving a negotiable CoT charge, which should not be more than N1 per N1000 withdrawal on current account. However, the banks took advantage of the opportunity to create Account Maintenance Fee, which has not been the modus operandi. Remember, Some banks are charging Card Maintenance Fee.
Lamenting the situation, a bank customer toldThe Guardianit was unfortunate bank customers are not properly briefed, especially concerning the frequency of the charges, to enable them have an option.
“These banks act as if they are above the law. They do whatever they like with impunity. How could you have encouraged people to bring their money to the bank, only for you to deductfrom theiraccounts with opaque reasons not properlycommunicated? The only thing you get is alerts to these charges, which are alsocharged afterwards. You are left wondering what these charges are for,”he said.
Authoritative source from the CBN explained that the regulator is still fine-tuning revised guidelines on charges and fees in banks, which would expectedly be made public before the end of the first quarter.
An Assistant Director in-charge of Payment Policy and Oversight, Banking and Payment System, CBN, Shola Agboola, said the regulator would no longer tolerate a situation, whereby bank customers’ complaints are left unattended.
Mu’azu added that “Revised Guide to Bank Charges clearly specifies allowed charges for all banking services and the CBN does not in any way condone the fleecing of banking customers under any guise.
“The CBN wishes to reiterate its resolve to continuously enforce 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).”
Outlining the complaint procedure to the CBN in the case of illegal charges, the Banks spokesman said all petitions are being treated with dispatch to the satisfaction of all parties in the matter.
A customer is to make a written complaint to his/her bank and if this is not resolvedwithin two weeks, then the complaint can be forwarded with evidences, if any to the Director of Customer Protection Department. Each complaint would be reviewed and investigated, while findings, recommendations and decisions are communicated to parties involved they do comply,” he said.
Many of the banks have denied allegations of illegal charges. Bank officials, who spoke on condition of anonymity, said customers are ignorant of what is happening in the banking sector.They said the new charges were at the instance of the CBN.
An operation managerat Fidelity Bank, who responded to enquiries on the CBN directive on refund of illegal charges said: “Please note that all charges to Fidelity Bank customers’ accounts are in line with the CBN guide on bank charges.Our Customer Complaints and Protection desk always investigate any case of customer complaints and where there is case of excess charges due to a higher rate or communication gap with customer on pricing, management approval is sought for reversal.Some charges occasioned by customer transactions such as Value Added Tax, Withholding Tax and lately, Stamp Duty are collected by the bank and remitted to State or Federal Government, as the case may be. But customers have the impression that these fees are taken as income for the bank, which is not correct.”
Similarly, an operations Manager with GTBank defended her bank, when she said:
“CBN is aware that we have zero tolerance for non-compliance to rules and they know we do not collect any charge not approved by it. We don’t collect illegal charges and so, we do not have anything to refund to anybody. They should identify erring banks and pass the instruction to them directly, because we have never at any time made any refund to any of our customers. I can tell you that we are not part of the N6.2b refund, as claimed by the CBN.”
As at last week, some bank customers reported refund alerts from their banks. Reading Account Maintenance Fee (AMF) refund, certain sums were paid into customer’s accounts.
Meanwhile, many Lagos residents did not observe the no-banking day declared by civil rights organisation, Consumer Advocacy Foundation of Nigeria (CAFON) on Tuesday.
All the banks visited on Airport Road Lagos, Ikorodu and Lagos Island, were in full service, as customers filled banking halls.
A female official at a GT Bank branch said the declaration did not affect bank, adding, “We have had customers in the bank today. Normal banking operations are going on. Our customers are making transactions and we have not seen any difference.”
It was gathered that many bank customers were not aware of the declaration.
“I am not aware of such order and I have already been attended to. I came here to make withdrawal and I even had to be on queue as usual,” said a female bank customer.
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