In a bid to improve the lending market as well as protect consumers of financial services, the Central Bank of Nigeria (the “CBN”) recently released draft Consumer Protection Guidelines on Responsible Business Conduct (the “Guidelines”). The principal objective of the Guidelines is to protect consumers against practices that weaken consumer confidence in the use of financial services.
The Guidelines sets out minimum standards expected from financial institutions on responsible business conduct and its provisions are applicable to all transactions by financial institutions licensed and regulated by the CBN – including the agents, subsidiaries, and associates of the licensed financial institutions. In addition, financial institutions are obligated to insert the provisions of the Guidelines in any consumer-related transaction, product or services agreement they execute with institutions not regulated by the CBN.
Generally, the Guidelines sets out standards requiring financial institutions to:
· Ensure the promotion of good business practices;
· Assist consumers to determine their financial needs and ensure proper planning to meet those needs;
· Efficiently assess the capability of consumers to repay credits;
· Ensure that debt recovery processes are courteous and fair, devoid of undue pressure, intimidation, harassment, humiliation or threat; and
· Ensure that advertisements and promotional materials on products and services are clear and not misleading.
Going forward, financial institutions are to put in place a policy documenting the processes, procedures, and systems designed to ensure compliance with the Guidelines. Financial institutions that fail to comply with the Guidelines will be subject to regulatory sanctions.
The contents of this news alert are meant for the general information of our clients and friends and do not amount to legal advice. All enquiries on the subject may be made to: firstname.lastname@example.org
Adepetun Caxton-Martins Agbor & Segun
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