Unending battle against multiple charges by banks

Samuel Elias, an operator of a medium size dry cleaning shop, was receiving cloths from his customers when he had a text message in his phone. Curiously, he opted to read the text before continuing. Shockingly, it was a charge on Remote-on-Us transaction and this time, the fee has increased from N65 to N66.30. Remote-on-Us charge is the fee for using the Automated Teller Machines of banks that are not the issuer of the debit or credit card used. The charge comes after the third withdrawal in a month.

Though Elias has recently learnt the channel for complaints at the Central Bank of Nigeria (CBN), he was concerned about many other issues- why would banks come up with charges without prior information? Why would banks change their fees at will? What happens to millions of Nigerians who do not know how to channel their complaints? When will the guide to the charges eventually be released? Even if the expected guide to bank charges is released, how would ordinary Nigerians access it? But first, how would they know that something like that exists?

For emphasis, the issue of erratic charges in banks has been on for a long time and there are no fewer than 10 identifiable charges associated with banking activities currently and in no particular order, they include the maintenance fees, which banks are now charging on monthly basis on current accounts. Newer complaints have also emerged that some banks are now charging maintenance fees on savings products. There is Value Added Tax (VAT) virtually charged on every fee against bank customer, including the SMS alert charge.

There are also charges for online transfers; over-the-counter; and 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.

“These institutions are just taking advantage of the ignorance of the majority. Even when they are cautioned by the authorities, I think it will be for the ones that the authorities are aware of. What about the extortions from those who don’t know how to channel their complaints? Many things are going wrong and hidden in the relationship between banks and customers,” a sombre Elias recounted.

While Elias’ lamentation is one of the many, these charges appear seamless to banks, go without questioning and with all manner of nomenclature. Perhaps, we can label some of these charges illegal too. Granted, all of them may not be wrong at the same time, but it is also dependent on the reasons advanced.

But the former Director of Corporate Communications Department, Central Bank of Nigeria (CBN), Alhaji Ibrahim Mu’azu, said to stem the assessed excesses of banks, there is need to alert CBN through its Consumer Protection Department through cpd@cbn.gov.ng

“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,” he said.

Whether justifiable or not by the banks, the financial industry regulator- the Central Bank of Nigeria (CBN), 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 are currently raising concerns among among customers of banks. Perhaps too, more closer examination would expose further illegality and increase the amount.

Fatokun

To appreciate the suspicion and understand the situations that will certainly give rise to the assessed random charges, the 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 into the scheme. These also show huge opportunities for banking transactions and that of charges and deductions from banks both legally and illegally.

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 hard work and normal banking business, as the easy access to cheap and zero-cost funds, belonging to government were withdrawn.

The development 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 CoT by January 2016, further sapped the non-interest earnings’ portfolio of banks and created more panic in the industry, with less than six weeks from inception, banks have rolled out multiplicity of charges that have affected customers.

Though CBN, foreseeing the panicky reaction to the zero CoT policy that took off this January, reversed self by approving a negotiable CoT charge, which should not be more than N1 per N1000 withdrawal on current account. However, 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.

A bank customer, who spoke to The Guardian lamented that the customers are not properly briefed, especially the frequency at which the charges will hit customers’ accounts, to allow them the opportunity to opt in or out.

“These banks act as if they are above the law. They do whatever they want to do and repeatedly. How can you say that you want people to bring money to the bank, only for you to be reducing their balances with reasons that are not clear and without proper communication. The only thing you will get is alerts to these charges, after which, those alerts will be charged again. Sometimes, you will be left wondering what the charges are for,” the customer said.

CBN recently released an exposure draft of the guidelines, while calling for input from stakeholders. Already, the month of March will end tomorrow and invariably, the end of the first quarter, which is the timeline given by the regulator

An Assistant Director in-charge of Payment Policy and Oversight, Banking and Payment System, CBN, Shola Agboola, said the regulator will no longer tolerate a situation whereby customers will have a problem and complain to banks and will not be attended to.

But Muazu added: “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.

“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).”