The Central Bank of Nigeria has begun tightening its rules to protect consumers of financial services.
Customers of banks and other Financial Service Providers (FSP) institutions overhauled by the CBN including loan apps are struggling with unfair deals entered into. Most of the agreements they sign are ambiguous and marred with secrecy.
But the exploitation may be tamed with the new rules instituted by the CBN it’s the ‘Revised Consumer Protection Regulations,’ seen by THE WHISTLER.
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The bank said in the exposure draft of the regulation, “Contracts with consumers shall not contain unfair terms. A contract term shall be considered unfair if it eliminates or limits the liability of an FSP to loss caused to a consumer by misrepresentation, negligence or misleading information on its products or services.
“Binds a consumer to an obligation while the corresponding obligation on the FSP is conditional; eliminates or limits FSP’s liability with respect to actions or commitments undertaken by their employees, agents, or intermediaries.
“Allows unilateral change to a contract without stating the circumstances under which the change could be made. Excludes or restricts any legal requirement on the part of an FSP to act with skill, care, diligence, or professionalism toward the consumer in connection with the provision of any product or service and/or any liability for failing to do so.”
Reports by the Federal Competition and Consumer Protection Commission (FCCPC) reveal that customers struggle with contracts entered with financial institutions in Nigeria.
The CBN recognises that some of the agreements are only binding on the customer and optional for the financial institution.
Sometimes, the interest rate of the term loans taken by customers of some financial institutions is raised without notification. But the CBN is now using its regulatory power to curtail the nuisance.
In the new rule, the apex bank said safeguarding the interests and ensuring greater protection of consumers in the evolving financial services landscape necessitated the review of the 2019 Consumer Protection Regulations.
The rule by the CBN now says, “Unfair terms used in contracts are void and shall not be binding on consumers. Where there is any doubt or ambiguity about the meaning of a term used in the interpretation, the most favourable to the consumer shall prevail.”
In its treatment of loans, the apex bank said FSP must obtain customers’ written authorization where repayment of a facility is sought before the due date, adding they should notify customers of possible variations in interest rates and other terms and conditions.
The CBN said contravention of the new rule may attract sanctions.