The complaints against the deposit money banks are varied – from simple over-charging to arbitrary fees and charges for services never rendered. Customers have reported high fees on routine transactions; fees for transactions they never undertook; multiple charges for a single transaction and charges imposed but never communicated to the account holder. Many customers know of certain charges only when they request detailed statements of their account.
Despite regular sanctions and new rules rolled out by the CBN from time to time, the banks often insist that they only charge in line with global practices, pre-arranged or statutorily approved regulations. There is truly no “free banking” worldwide and in most jurisdictions, you pay fees even when you keep your account in credit. In developed and well regulated jurisdictions, the authorities are constantly alert to new forms of exploitation of the consumer. In the United States and the United Kingdom, the customer attracts high fees only when he overdraws on his credit ceiling using a debit card or on an overdraft or when it involves foreign transactions. Otherwise, bank charges or transaction fees – all charges and fees mostly in respect of current accounts – are usually low.
The CBN should have the capacity and the will to enforce its rules, especially on transaction charges, and to punish those who circumvent them. When in November 2012, the Bankers’ Committee – the forum of bank CEOs and the CBN management – unanimously agreed to halt the N100 charge per transaction on inter-bank ATM usage, was it agreed that the banks be allowed to subsequently recoup by new charges such as the N100 monthly “card maintenance fee” imposed from last month by First Bank? Customers were not mollified by the FBN statement that the N100 would cover all transactions for cash within the month. Other banks have been charging similar card maintenance fees even when the N100 charge per inter-bank ATM transaction was in place. In the UK, monthly or daily maintenance charges are imposed mainly when a customer takes an unauthorised overdraft.
The apex bank should streamline transaction charges and ensure that banks stick to globally accepted fees that include stopping a cheque, obtaining a bank draft, statements, banker’s draft, reference and payments made or received from abroad. More importantly, customers know beforehand the rates and conditions of transactions. Here, many bank customers have been confronted with charges they were not adequately prepared for. Banks should endeavour at all times to give customers full details of all charges, rates and fees at the point of opening an account or making a transaction.
There is a need also to develop other arms of the financial sector such as savings and loans, and cooperative and thrift institutions, to give customers a wider range of choice. When in September 2011, some large American banks introduced debit card fees, within a few months, 650,000 depositors moved their accounts to credit unions, as cooperatives are called in the US.
The CBN should make good its recent promise to strengthen its consumer protection unit to end what it called the “crisis of confidence” between Nigerian banks and their customers. It should follow up on its commendable recovery and refund of N5 billion wrongfully taken from customers last year by scrutinising dormant accounts that are fetching the banks billions of naira each year and on unauthorised deductions on behalf of banks’ sister companies. There is, said the bank, “a clear indication of customer dissatisfaction with the quality of services and charges in the Nigerian banking system.”
Reports by Enhancing Financial Innovation & Access, a non-profit organisation, in 2010 said only 21 per cent of Nigerian adults have bank accounts with about 130 million people having none. Excessive and indefensible charges discourage many from using the banks and keep our economy cash-based despite spirited efforts by the CBN to reverse the trend.
Account holders, too, have a role to play. They should always ask for their transaction statements at regular intervals and seek clarifications on everything they don’t understand; use the websites and help lines/enquiries desk of banks to find out about all charges and fees before undertaking any transaction or opening an account.
We need strong consumer protection lobbies to engage bankers, regulators and customers. The National Assembly should take a stronger interest in the banks as other parliaments around the world are doing to ensure that we have a banking sector that can instil confidence, attract savings and stimulate the productive sector of the economy.