Consumer Protection simply refers to the system of Regulatory checks and measures aimed at protecting the rights of consumers and securing legal remedies where those rights have been breached.
In the Nigerian Banking and Financial Services Sector, the Central Bank of Nigeria (CBN) passed the CBN Consumer Protection Regulations on the 20th of December,2019 pursuant to the earlier Consumer Protection Framework issued on the 7th of November, 2016.
This article will be looking at the following focus areas :-
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– The applicability scope and objectives of the CBN Regulations.
– The provisions of the CBN Regulations on some key Consumer Protection principles in Nigeria.
– Available sanctions for consumer rights violations under the regulations.
What is the applicability scope of the CBN Consumer Protection Regulations?
The Regulations apply to all institutions licensed and/or regulated by the CBN.
Financial Institutions are to ensure that the provisions of the regulations form part of any consumer related transaction, product or service agreement they may enter into with any entity not regulated by the CBN.
What are the objectives of the CBN Regulations?
The CBN Consumer Protection Regulations were created with the aim of :-
– Protecting consumers from unfair & exploitative practices by institutions in their dealings with the consumers.
– Protecting consumers from unethical and predatory practices that undermine consumer confidence in the use of financial products and services.
– Protecting consumers against the provision of inadequate & misleading information and/or failure to disclose material information.
– Ensuring consumer access to complaint redress mechanisms that are free, fair, timely, transparent, accessible & independent.
– Encouraging transparency of institutions in their dealings with customers.
What are the provisions of the regulations in its espoused Consumer Protection principles?
Some of the notable provisions of the regulations in its espoused Consumer Protection principles are:-
Fair Treatment of Consumers
– FIs (Financial Institutions) shall treat consumers equitably without bias at all stages of a business relationship.
Unfair Contract Terms
– A contract term is unfair if it eliminates the liability of an institution to loss caused to a consumer by misrepresentation, negligence or misleading information on its products or services.
– Unfair terms used in contracts are void and shall not be binding on consumers.
Disclosure & Transparency
– FIs are to ensure that documents made available to consumers shall be written in clear, legible and simple English language in a minimum font size of 10.
– FIs must ensure that the disclaimer “terms and conditions apply” shall only be used if terms and conditions have been explained and disclosed as well as technical terms being clearly explained to the consumer to aid better comprehension.
Advertising
– FIs shall comply with disclosure directions for all Financial/Banking product advertisement and promotional materials.
– The contents of advertisements shall be factual and unambiguous, expressed in clear and simple communications and shall not be offensive, misleading, deceptive or injurious.
Data Protection & Privacy
FIs are to abide by all CBN Guidelines and Regulations regarding Consumer Data Privacy & Protection as well as all other general regulations including the Nigerian Data Protection Regulations.
Complaints and Management Channels
FIs are to set up and maintain complaint management channels that can include letters, emails, telephone lines, social media and digital software platforms.
FIs are to ensure that complaint management mechanisms are effective, functional , efficient and accessible. Also, FIs are to generate a unique identifier & acknowledge complaints within 24 hours of lodgment.
What are some of the sanctions for Consumer Rights violations under the regulations if any?
The CBN, which is charged with enforcing the provisions of the regulations, can impose a number of sanctions on erring FIs in this regard, some of which are :-
-Non-resolution of complainants by FIs within prescribed timelines will attract a punitive fine of 500,000.00 Naira per complaint per week while the violation lasts.
– Non-acknowledgement of complaints from customers and non-issuance of complaint tracking numbers can also attract a fine of 2 Million Naira per complaint imposed by the CBN.
– Non-response to requests or a failure to comply with a CBN Consumer Protection directive will earn a fine of 2 Million Naira imposed by the CBN.