New guidelines issued by the Central Bank of Nigeria (CBN) demand all commercial banks and financial institutions to promptly notify customers on all transactions on their accounts as part of their contractual obligations. The new guidelines on Disclosure and Transparency issued last Thursday in Abuja said financial institutions must notify their customers about the amount and date of the transaction as well as the account balance. Besides, the transaction narrations in account statements must state clearly the nature of the transaction, date, payer or payee, transaction channel and location.
The guidelines include details on how financial institutions would henceforth handle general information to their customers as they relate to advertisement, pre-contractual and contractual disclosures, credit facilities, deposits, This is pursuant to the powers conferred on the CBN by Sections 2 (d) and 33 (1) (b) of the CBN Act, 2007 (as amended) and Section 57 (2) of the Banks and Other Financial Institutions Act [BOFIA] of 2007, as amended.
The guidelines were contained in the Consumer Protection Framework (CPF) for financial institutions regulated by the CBN.The affected financial institutions include commercial banks, merchant banks, specialized banks, micro-finance banks, development finance institutions, finance companies, bureaux-de-change, and primary mortgage banks.
Others credit bureaux, mobile money operators, payment service banks, switching companies, payment solution service providers, payment terminal service providers, non-bank acquirer, super agents and mobile money operators. The CBN said the documents is to protect consumers against the provision of inadequate, misleading or failure to disclose material and relevant information and generally guard against lack of transparency by Financial Institutions in their dealings with consumers
The guidelines are to ensure consumers provided with all material and relevant information regarding their business relationship in a clear and transparent manner. On contractual disclosures, the new guidelines demand that any proposed and final contract must contain information on key features, risks of the financial product or service, tenor of the contract as well as nature, amount and method of calculation of any interest, fee or charge and when it is payable.
Other details include any changes that may be made to the contract terms, and how the consumer will be informed of such changes; information on how to lodge a complaint to the financial institution and how to escalate complaint to the CBN where necessary. Also, the consumer must be provided with monthly statements of account for all products and account types, including loan accounts, special accounts and other associated accounts at no cost to the consumer.
In addition, the customer are entitled to account balances on request, while the financial institutions are obliged to give prior notice of variation in interest rates to customers. The notification to the customers on variation, the CBN said, must state the reason for the variation, commencement date, the revised repayment schedule and the alternatives available such as concession, restructuring, re-negotiation, opt-out or termination of the contract.
Any variation in interest or any other rate, the CBN guidelines said, shall only be implemented after five working days of the notice. On credit facilities, the new guidelines said any contract for credit must state the name and contact details of borrower, type and purpose of credit, collateral pledged and its estimated value, the amount of credit or applicable credit limit as well as conditions precedent to facility drawdown.
The information to be issued by the financial institution to the customers also stipulated the debt recovery process, moratorium, insurance requirements, details of lending fees, and variable rate information. The customer information should also include repayment schedule for instalment loans, early liquidation terms, total cost of the credit, and applicable rate of interest or fee relating to late payment or default.
Henceforth, the banks are expected to conspicuously display in their banking halls and publish on their websites and internet banking platforms, accurate and up to date information on all their products.
These include prime and maximum lending rates, deposit rates, foreign exchange rates of currencies. On advertisement, the content of all advertisements and promotional materials must be factual and unambiguous, expressed in clear and simple language and shall not be offensive, misleading, deceptive, injurious, or exaggerate the benefits of the products or services being advertised.
Unsolicited advertisements through emails, text messages, voice calls and other channels sent by or on behalf of a Financial Institution shall be at no cost to the consumer and shall contain an opt-out provision for future advertisements. Failure to comply with the guidelines, the CBN said, shall attract regulatory sanctions provided for by the CBN Act, the BOFIA, other laws and regulations.