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Time to eliminate excess bank charges

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The Challenge of curbing Excess Bank Charges has been in the Nigerian Banking Industry for years. Even, incidences of excess bank charges have become more prevalent since the deregulation of the industry in the late 1990s and early 2000s. a time of celebrating Nigeria at 59 is a time to empower citizens to resist this scourge – excess bank charges.

Banking industry’s regulators and supervisors – the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC)- have been trying to find solutions especially through the issuance of regulatory Guidelines on bank charges and interventions when there are complaints. However, the situation remains largely unchanged till date. Banks still find ways to short-change their innocent customers. In this connection, we propose some roles and responsibilities that stakeholders can play to redress the unfortunate cheating of customers by their banks.

There are various types of excess bank charges customers, be they individuals or corporate entities, have suffered in the hands of their banks for which insignificant number of them had complained of or petitioned against. Some of the charges arose from: Interest on Overdraft Credit Facilities; Interest on Loans/Tenured Instalment Repayment Credit Facilities; Commissions on Turnover(COT); Value Added Tax; Credit Facility Processing Fees; Advisory Services Fees; Credit Facility Renewal Fees;Credit Facility Administration Fees; Credit Appraisal Fees; Credit Facility Commitment Fees; Credit Facility Re-Negotiation Fees; Commissions on Draft Fees; Returned Cheques Fees; Letters of Credit Fees; and Handling Charges Fees. Banks had also short-paid or indeed, denied customers what was due to them in respect of Interest on: Deposits in Domiciliary Accounts; Current Credit Balances; Savings Balances; and Fixed Deposit Accounts.

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Banks employ a variety of methods to achieve the excess charges. For instance, they Charge: Fees/interests above regulated amount or per cent ages; fees on services and products not specified and authorised in the Guide to Charges by Banks and Other Financial Institutions in Nigeria without prior notification to and approval by CBN; More than a “One-off charge” i.e. Multiple Charges; Beyond “Cost Recovery”/Actual Cost incurred. They also do not negotiate charges that need to be negotiated but simply impose such charges on customers; and there are as well cases of Imposition of “Penal Charges” where such charges are inapplicable and unnecessary.

Efforts have been made by the regulators and supervisors of the industry to eliminate excess bank charges but they have remained unsuccessful. Some of the efforts include: the Issuance, by CBN, of the Guide to Charges by Banks; Periodic Examination of banks by the Regulatory and Supervisory Authorities; Establishment of the Bankers Committee Sub-Committee on Ethics and Professionalism for intervention in cases of banker-customer misunderstandings/disagreements; Establishment of: Consumer Protection Department in CBN to cater for the needs of bank customers; Consumer Protection Council (CPC) that has powers to intervene in cases between providers of products and services and their consumers; Alternative Dispute Resolution Centres/Bodies (e.g. Lagos and Abuja Multi-Door Houses) where aggrieved persons can seek redress; Organisation, by Bank Customers Association of Nigeria (BCAN), of several public enlightenment programmes for bank customers ; and availability of the various Law Courts that adjudicate on, among other things, Banker-Customer disagreements.

Since excess bank charges are still prevalent and threaten consumer and general publics’ confidence in the banking system and the economy, it has become imperative that roles and responsibilities be developed and implemented by stakeholders to fast-track an end to the decease.

Consequently, BANKS should acknowledge openly that they have been involved in over charging their customers; offer public apology and promise never to do so again; Enter into written Agreement with the CBN for imposition of Exceptional Penalty and/prosecution upon commitment of Excess Charge; Take full responsibility to bring to an end Excess Bank Charges in the Nigerian Banking Industry; Commit to non-tolerance of excess charges again, no matter the excuses or circumstances; Commit to total adherence to the provisions of the Nigerian Banking Industry’s Codes of: Conduct; Corporate Governance; Ethics and Professionalism; as well as the industry’s Values and Standards; Commit to compulsory and non-compromising Compliance with Banking Laws, Rules and Regulations; Ensure: availability of adequate number of qualified, knowledgeable and experienced Staff; the strengthening and effectiveness of Internal Control/Quality Assurance Systems; proper and effective Supervision, Monitoring and Oversight of operations by Management; and Computers and other technological tools being deployed for banking operations e.g. for the computation of bank charges, are properly configured and fed with correct information in order to generate correct output.

On the other hand, BANK CUSTOMERS should: Obtain copy of the Guide to Charges by Banks and Other Financial Institutions in Nigeria issued by CBN, study and make use of the contents to always cross-check charges by banks; Monthly or periodically review and confirm charges in the Statements of Account; Report to banks observed excess charges in account and request for correction; Report to the Sub-Committee on Ethics and Professionalism whose office is at the Chartered Institute of Bankers of Nigeria, Victoria Island, Lagos or Consumer Protection Department at CBN or Consumer Protection Council at Abuja or any of its Zonal offices across the country, for intervention, if bank fails to correct the anomaly. Where a customer is unable or incapable of monitoring and reviewing charges in his account, the services of an experienced Financial/Banking Consultant can be sourced; A Customer should take full responsibility for confirming accuracy/correctness of entries in his account.

As for the REGULATORS AND SUPERVISORS- CBN/NDIC- they should include in the Guide to Charges by Banks and Other Financial Institutions in Nigeria, a provision that mandatorily compels banks to adhere to the provisions of the Guide; Provide in the Guide deterrent sanctions/penalties for non-compliance; Enter into formal written Agreement with banks for imposition of deterrent penalties and/prosecution upon the commitment of excess charge; Provide in the Guide that any bank found to have perpetrated Excess Charge must do at least three things viz: a) Write an Apology Letter to the customer short-changed (with a copy of such apology endorsed to the Regulators); b) Publish in its Annual Report and Statement of Accounts, the names of customers and the amount overcharged each of them; and c) Refund the excess amount multiplied by two plus interest calculated at lending rate on a Compounded basis. CBN should Provide in the Guide that Excess Charges are refundable anytime they are discovered i.e, they are not

“Time Barred”; Develop and update regularly, a list of banks involved in Excess Bank Charge for “Naming and Shaming” them; Work with the National Assembly to Criminalise Excess Bank Charge by recognising it as a Fraud committed by any bank and other financial institutions and their identified Staff. Both the bank and identified staff that are responsible for excess bank charge should be separately or jointly and severally prosecuted and sentenced upon conviction; Non-tolerance of banks not implementing corrective directives or recommendations from the Regulators and Supervisors; Increase the frequency of Examination and Supervision of banks’ operations and activities so that wrongs can be detected early and corrected; Penalise severely officials of CBN/NDIC that fail to perform their duties in the regard of excess bank charges i.e, ensuring that customers are not swindled/short-changed by their bankers; Review the Guide, at least two-yearly, to accommodate developments that have implications on costs and charges in the banking industry and the larger economy.

On its part, the FEDERAL GOVERNMENT should make a law that declares Excess Bank Charges as Fraud against the people and businesses; Provide serious penalties against banks and their identified staff that perpetrate excess bank charges; and ensure quick resolution, by the Judiciary, of cases involving Excess Bank Charges.

The CHARTERED INSTITUTE OF BANKERS OF NIGERIA (CIBN), the umbrella Professional body for Bankers that had published, without the real names of the parties in each case, the first and second editions of the book “ETHICS AND PROFESSIONALISM IN THE NIGERIAN BANKING INDUSTRY-DECIDED CASES , should henceforth publish  future editions of the book inclusive of the real names of banks and customers involved in each case as is done in the Nigerian Law Reports. At least, that will expose banks involved in the unhealthy practice of excess charges. The Institute should also: Work with the Regulators to develop and update a list of banks involved in excess charges for the purpose of “Naming and Shaming” them; Develop and implement relevant training programmes for bankers and customers to inculcate in them the ethical values necessary for banking operations devoid of excess charges; Implement the provisions of the Chartered Institute of Bankers of Nigeria Act, the Code of Conduct, etc and activate the Disciplinary Tribunal of the CIBN against perpetrators of excess bank charges; Work with CBN/NDIC and the National Assembly to make excess bank charge a fraud (crime) punishable by serious fine and/or imprisonment; Fast-track the resolution of excess bank charge cases brought to the Sub-Committee on Ethics and Professionalism for intervention.

•Ogubunka FCIB, President, Bank Customers Association of Nigeria (BCAN) is a visiting member of the Editorial Board.

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