Firm urges CBN to audit CoT charges in banks

A CALL has been made to the Governor of the Central Bank of Nigeria (CBN), to implement and audit its directive to all banks on reduction of Commission on Turnover (COT), as the charges are currently crippling Small and Medium Enterprises (SMEs).

The appeal was made by the Chairman of Builders’ Mart, Ayobami Biobaku, who alleged that CBN has not enforced the COT rule it set in 2013.

He lamented that the apex bank’s inaction has created the impression that it had decided to overlook the issue, while the banks continue to collect such spurious charges at will.
According to Biobaku, the CBN should carry out audit trail of banks with regards to COT charges, to foil the crippling effects on SMEs, adding that COT charges are now “like cancer that is slowly and silently killing SMEs.”

The COT is a charge levied on current account customers on withdrawals and calculated at the end of every month, applying the percentage on a customer’s aggregate withdrawals from the first day of the month to the last day of same month, even with VAT charges by some banks.

Worried by the harmful effect of COT on SMEs, CBN in 2013, met with the Bankers’ Committee to find lasting solution to the issue and the result was the committee came up with a special guide on bank charges that both parties endorsed, but up till date that agreement has not been enforced by the CBN.

But on June 11, last year, the CBN in a circular to all deposit money banks titled, ‘Implementation of the Revised Guide to Bank Charges- Commission on Turnover’ reminded all banks that “The CBN, in conjunction with the Bankers Committee, issued the Revised Guide to Bank Charges (the Guide) on March 27, 2013, which sought to standardise charges for various products and services offered by banks.
“Section 3.1 of the Guide provides that COT is negotiable subject to a maximum of N3 per mile in 2013; N2 per mille In 2014; N1 per mille in 2015; and that no COT would be charged from 2016.

Sources in the financial sector revealed that some banks were still charging COT at the rate of N3 per mille till date, which was the agreed rate for 2013.
The CBN reiterated in its 2014 circular that the maximum COT allowed by the Guide for 2014 was N2 per mille.
“Consequently, all banks that have charged excess COT since the effective date of the Guide are hereby required to refund same to the affected customers not later than thirty (30 days from the date of this circular).
“Our attention has also been drawn to the practice, by some banks, of charging fees which are alien to the Guide. For example, some banks offer accounts that are supposedly COT-free but impose a maintenance or similar fee – a fee not covered by the Guide,” CBN said.

Biobaku alleged that almost all the banks have failed to comply with the CBN directive to refund money wrongly collected from customers since 2013 and that customers were still being charged by these banks in violation of the directive.
He urged the CBN to come to the rescue of banks’ customers because they are losing a lot of money that should improve their businesses to the banks.