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Banks’ cheating customers

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By Elorm Desewu

The Bank of Ghana’s (BoG) maiden on-site market conduct examinations of the banking sector reveals many infractions and breaches with regard to the operations of the banks in the country.

The market conduct examinations by the BoG show that some borrowers were not provided with pre-agreement disclosure statements prior to the signing of loan agreements. Borrowers were not clearly informed of the requirement to submit their credit data to credit bureaus and to conduct credit search on them when taking loans.

Also the maximum penalty of 0.25% for early repayment of loans was breached. Prior to pursuing enforcement actions on loan defaulters, the minimum prescribed notice period of 30 days was not given some borrowers.

According to the BoG, personal details taken from remittance customers were subsequently used for telemarketing promotional activities without the consent of the affected persons.  Abandoned forms or slips used by customers for balance enquiries and other transactions were not properly disposed of, thereby exposing customer personal details to third parties.

Additionally, customers’ savings accounts were charged for over-the-counter withdrawals below stipulated minimum amounts. Customers were automatically signed onto E-banking products and services and consequently charged without their explicit consent.

It is instructive to note that, changes in terms and conditions of loan agreements were made and implemented without the required period of prior notification of customers. Ambience Access to most banking facilities such as banking halls and ATMs were not friendly to physically-challenged persons. There were instances where hawking activities were allowed in front of some banking halls.

It was revealed that some banks were not able to deliver on marketing promise of disbursing certain loan facilities within 24 hours. Inadequate training of staff especially frontline/customer service officers and loan officers on the two consumer protection directives issued by the Bank of Ghana and other conduct related topics.

 Area of Examination Findings Channels provided by banks to enable customers to lodge complaints such as SMS, Website portal and dedicated telephone lines, did not function.

The Bank of Ghana’s current market conduct regulatory regime is underpinned by the Banks and Specialized Deposits-Taking Institutions Act, 2016 (Act 930), the Borrowers and Lenders Act, 2008 (Act 773), and the Credit Reporting Act, 2007 (Act 726), among others.

Section 3 of Act 930 mandates the Bank of Ghana to, among other things, regulate and supervise the conduct of banks and SDIs. In pursuance of section 3(2)(d) and section 92(2)(a)(xi) of Act 930, the Bank of Ghana issued the Consumer Recourse Mechanism Guidelines for Financial Service Providers in 2017 to provide customers of institutions licensed by the Bank of Ghana (banks, Savings & Loans Companies, Finance Houses, Rural and Community Banks, Micro Finance Institutions and Forex Bureaus) with access to adequate redress that is fair, efficient, timely, and without cost to the complainant.

Specifically, the Guidelines require licensed institutions to display notices in all branches, informing their customers of the processes in place at that institution for lodging and addressing customer complaints, the timelines for resolving such complaints, and how unresolved complaints may be escalated to the Bank of Ghana. The Guidelines also provide for how customers may lodge complaints with the Bank of Ghana if they are unsatisfied with the manner in which their complaints have been dealt with by the licensed institution, after which they may proceed to court for redress if they remain unsatisfied.

In pursuance of section 7 of the Borrowers and Lenders Act, (2008), the Bank of Ghana also issued the Disclosure and Product Transparency Rules for Credit Products and Services in 2017, to help ensure that borrowers are able to make informed decisions before signing up for credit products or facilities. The Rules also seek to promote fair and equitable credit practices by lenders by:

 Prohibiting discriminatory lending practices for reasons that are noncommercial in nature (i.e. lenders cannot discriminate on the basis of tribe, religion, political affiliation, etc.);

 Requiring lenders to strictly ensure the suitability of credit products for various types of consumers;

 Requiring mandatory disclosure of all fees, interest rates, charges, and other terms and conditions prior to loan approvals and disbursements, and the signing of a Truth-in Lending Agreement with each borrower;

 Limiting loan prepayment penalty fees which were previously set at the discretion of licensed institutions, to 0.25%.

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