LTV/CAFON Consumer Forum: Raising Consumer Issues in Banking Transactions
Tochukwu Onyiuke is a lawyer. I met him when I googled the phrase ‘consumer rights violation in banking transactions’ and an article he had written for BusinessDay on the consumer’s legal rights and responsibilities in case of ATM fraud popped up. Like every Nigerian who owns a personal account, he was railroaded into getting an ATM card without clear contract terms; only that it was bank policy that all personal accounts are issued ATM cards (I guess in an effort to decongest the banking hall, consumers are forced to use the ATM or get penalized as much as N200 or more if they chose to transact business less than a predetermined amount across the counter.)
Well, he took the offer in good faith only to detect unauthorized withdrawals from his account in strange places he had never been to. When he complained to the bank, he was summarily informed that he must have been careless with his PIN and there was little the bank could do about his loss. In simple English, it was his fault that his account was pilfered and his money stolen while in the custody of the bank. He is suing the bank for culpability simply because he is a lawyer.
Ladi Abiodun is the MD of Stewardship Limited, a company that deals in customized special services vehicles. Sometime ago, his company secured N150m loan facility to transact some business at 21% interest and 2% COT. While Ladi’s company never used up the whole facility at any time during the transaction, and in spite of some delays that almost bungled the transaction, his bank consistently charged him interest at 24% of the total sum! On closer scrutiny, with the help of an Audit Consultant, he discovered that he had been overcharged over N13m in fees on the principal!
It took Ladi becoming almost belligerent and threatening hell and high water for his bank to finally refund his money! The incident fired Ladi so much that he was ready to sue the bank for interest and damages on the overcharged funds mostly because of the nonchalant attitude of the bank staff to his plight until he hired a consultant and emailed the MD directly.
Dr Esuga, MD Feed Masters Limited, Kaduna got a facility for N20m only to discover that his account had been overcharged by more than N5m! When he wrote the bank, it took over 2 years for him to get a response that on their investigation, they only overcharged him N1.8m and not the N5m he claimed. 2 years! Talk about rotten customer service!
The icing on this cake is that the miscalculation was a result of an error in their computer programming which miscalculated his interests! Can you beat that? The implication of such a claim is that since the bank did not buy one computer application exclusively for Dr Esuga, it means EVERY customer who had a loan in that bank during the same period must have been victims of the same “computer error”! However, how many were aware that they were being fleeced by the bank they trusted to keep their money and support their progress and prosperity?
Sola Salako (yes, that’s me!) was loyal to her bank for more than 12 years. She never questioned any charges and never asked for any concessions. It was just basic banking with healthy turnovers and a good relationship with her bank, until she took a personal loan of N1m and could not meet the payment schedule due to a slow business cycle; then all hell broke loose! Her bank refused every attempt to reschedule because they felt she was a “big girl” and should do anything to keep up payment, beg, borrow or steal. They also declined the request to suspend interests so she could concentrate on the principal. When she wasn’t paying up as fast as the bank wanted, the harassment began. She gets a call at 7.00a.m one morning from a supposed Recovery Agent who threatened her with bodily harm if she didn’t pay up immediately, calling her unprintable names!
The next arsenal was to change agents, and passed her case to a thug-like individual who came armed with every personal detail of her movements, what car she drives, when she travels and where to; this ‘stronger’ agent threatened to impound her car (which was not a collateral to the loan by the way), disgrace her…all her sensitive information was handed to a third party she had no relationship with, exposing her to possible danger (what if the ‘recovery agent’ became an informant to unscrupulous elements, just because she trusted the bank with her privacy?).
All of this harassment was in addition to the mandatory penalties and interests accruing to the default so the bank was making money while the loan was in default and harassing her at the same time! Double jeopardy, if you ask me.
I could go on with similar stories but for space. These individuals represent millions of Nigerian consumers who endure the incompetency, insincerity and sometimes, downright fraudulent practices of most Nigerian banks. Many have suffered in silence, either due to ignorance, exasperation, or the social bashfulness prevalent within our culture. There are growing concerns on the integrity and equity of service delivery in the banking sector. There are also incidences of illegal, hidden or fraudulent charges we are all made to pay for services like SMS Alerts, Account Statement Printouts, Cash handling charges, Penalty fees for withdrawing certain amounts across the counter etc. The list seems endless.
(For instance, you pay a “commitment” fee of 2% to take a loan at Sterling Bank separate from Administration fees…and oh, you also pay a “life insurance” premium of 1% of value upfront. Which insurance company insured your life during the period? You may never find out! Also, remember UBA and Dotun Olaifa’s story of “cash handling charges? We could go on and on.)
The on-going “Hurricane Sanusi” has exposed so many structural deficiencies in Nigeria’s banking sector begging to be fixed. However, everyone seems fixated on the solvency or otherwise of these banks only, while little attention is paid to the integrity of their transactions with the customers who keep them solvent in the first instance. While the restructuring and recapitalizing is going on, millions of Nigerians are still being defrauded by faulty systems, insincere contractual terms, aggressive, misleading and unfair practices which costs them their hard earned and harder to come by money in this harsh economic season. However, while the banks are so focused on the bottom-line, they are incurring greater loss which would have long term damaging effect; that is the trust of the consumer.
The business of banking is founded on trust, integrity, honesty and selfless service. Practically all these values are missing from consumer perception of today’s banks. Unless these are taken into consideration in the ongoing process, “Hurricane Sanusi” would only have succeeded in postponing the evil day. As long as banks can get away with the questionable means of raking in profit at the expense of consumers, many more consumers will desist from engaging the formal financial system. Already, it is a documented fact that over 50% of cash circulates outside the banking system. Distrust will increase that percentage if not checked immediately. Already, many consumers are avoiding the use of ATM machines preferring to do large cash withdrawals than the draw-as-you-use benefit of the ATMs.
In an attempt to include the consumer angle in the on-going discourse, Consumer Advocacy Forum, a not-for-profit group birthed by this column (Handwriting on the Wall), in conjunction with Lagos Television, is holding a Consumer Forum on Banking Services titled “Your Rights and Responsibilities in Banking Transactions” to empower consumers like Tochukwu, Ladi and Sola with information on their rights, risks, responsibilities and redress options as they deal with the banking sector. Date is Tuesday September 29, 2009 at 11.00 a.m 2.00 p.m. Venue is the Lagos Television Hall, 2, Lateef Jakande Road, Agidingbi, Ikeja Lagos.
It is an open forum to express consumer concerns, experiences and options in banking while professional consultants in the legal, accounting and IT implications will be available to provide free counsel for consumers going through any or more of these kinds of experience. If you cannot make it there, then tune in to Lagos Television during the period as we are hopeful to broadcast live. Lagos Television can be seen on DSTV Channel 129 if you are outside the free-to-air coverage.
Consumers can no longer afford to suffer in silence. It is time to give them a voice and we are thankful for the support of Lagos Television, Business Day, Fenway Couriers, Purples Consult Limited and National Association of Seadogs (NAS) International who have contributed to providing this platform.
Our ultimate goal is to empower Nigerian consumers with information required to protect themselves from these incessant risks in banking transactions. We can only hope that would reduce our exposure while we await the regulatory bodies to step up their realignment of the sector. Please send an email to the address on this page if you have any experience to share. I will keep you posted on the outcome of the event. Everyone is invited.
