“The Central Bank of Eswatini (CBE) has a Market Conduct and Consumer Protection (MCCP) Unit that regulates and supervises the Conduct of Financial Institution’s (FI’s) under the Central Bank’s purview. That is, banks, Authorized Dealers with Limited Authority (foreign currency exchanger/bureau), money transmitters, and Payment Services Providers (e.g. Mobile Money Service Providers).

Our Purpose

MCCP Unit has a mandate to ensure the following;

  • Protecting and enhancing the integrity of the financial system.
  • Ensuring that CBE’s regulated entities’ market conduct policies and practices conforms to regulatory framework and standards to secure protection and fair treatment of consumers.
  • Promoting effective competition in the interest of consumers.
  • Empowering consumers to make informed financial decisions through provision of financial education, raising awareness on financial consumer protection related laws and promoting financial inclusion etc.

In fulfilling the mandate, the MCCP Unit is guided by the following laws;

  1. Financial Institutions Act, 2005
  2. CBE order, 1974 (as Amended)
  3. Consumer Credit Act, 2016 (as Amended)

The are other Secondary legislation flowing from these laws that MCCP uses to guide FI’s market conduct. 

Conduct Risk Assessment

In assessing conduct risk, the Central bank focuses on the following conduct outcomes.

  1. Product development: assess that FIs adequately evaluate consumer needs at product design; contract terms are fair, competitions concerns in product development etc. For example, checking whether terms and conditions of products developed do not have any exit barriers.
  2. Disclosure and transparency: assess that FI’s strategies do not take advantage of consumers through assessing that marketing and advertisements describe products or services in a clear, fair and not-misleading way to prevent potential misunderstanding by consumers and poor purchase decisions.
  3. Sales process: assess that FI’s do not take advantage of information asymmetry such that they sell products which are not suitable to the consumer and aggressive sales practices leading to over-indebtedness etc.
  4. Post sales handling: we assess the risks that post sales systems are not operating as consumers have been led to expect and/or lead to unreasonable post sale barriers resulting in unfair consumer outcomes. This includes supervisors making an assessment on the customer complaints and redress mechanism in the financial institution.  also assesses competition concerns in post-sales handling by FIs e.g. existence of barriers to exit.

The Consumer Credit Act (CCA) 2016 as Amended.

Who Qualifies as a Consumer Under The CCA?

Natural persons and companies (whose turnover does not exceed E1 million).

Summary of Consumer Rights From The CCA

Consumers have rights to:

  • Apply for credit and be provided with reasons why if credit is declined (Sections 9 and 30) 
  • Receive information in plain and understandable language (Section 29)
  • Be given documents related to the credit transaction including when the agreement is amended (Sections 32 and 54)
  • Be charged only fees allowable under the Act (i.e initiation, service, interest, credit insurance, default administration charges, collection costs (Sections 39 and 40)
  • Choose an insurer with whom to take credit life insurance to cover the debt (section 44)
  • Receive one free monthly statement and at any time a free statement of amounts owing (Section 45 and 47) 
  • Challenge debit or credit entries in a credit agreement and received explanations from credit provider including right to escalate matter to Regulator when not satisfied with response by credit provider (Section 48 and 52)
  • Receive settlement amount to clear debt at no charge and terminate the agreement by paying the settlement amount at no additional charge (section 50 59, and 97).
  • request reduction of credit limit (Section 55)
  • Rescind credit agreement and repaying all funds received but may be charged delivery and initiation costs (section 58)
  • Confidential treatment of personal information (Section 73)
  • access and challenge information held at a credit bureau (Section 79)
  • Receive one free credit report once a year from a credit bureau and to challenge any incorrect information (Section 79)
  • Apply for debt review from a debt counsellor- (section 86) 
  • Make early payments at any time and for this to be credited immediately they are made (section 98) 
  • Surrender goods under hire purchase or a secured loan and request credit provider to sell at reasonable price (section 99).
  • Receive a notice in writing from credit provider that you are in default (section 100)

Responsibilities Of Consumers When Using Financial Products

  1. Provide accurate, up-to-date information.

It is your responsibility as a consumer to provide your bank with the latest and accurate information. Section 25(1) of the Consumer Credit Act (CCA), 2016 (as amended) states that the consumer shall ‘fully and truthfully’ answer any requests for information by the financial institution. If anything changes in your circumstances, it is your responsibility as a consumer to timely inform your bank. This could be a change in your financial status, a change of location, or a change in any of the documents submitted as “Know-Your-Customer” (KYC) documents.

  1. Meet financial obligations.

As a consumer, you also have a responsibility to meet your financial obligations. If you have set up a stop order for monthly loan repayments, it is your duty to check that the stop order payment is deducted by reviewing transactions in your bank statement. The consumer also has responsibility to take prompt action when they discover that they may end up not being able to meet this financial obligation. For example, Section 55 (1) of the CCA states that the consumer can request to reduce his credit limit under a credit facility.

  1. Protect financial information.

It is also your responsibility as a consumer to ensure that you protect all your financial information and that only individuals with your approval have access to such information. This includes protecting your Personal Identification Number (PIN), access codes and payment cards, passwords, storing your statements in a safe environment, etc. This also includes making sure that when you dispose of any information, it is discarded correctly.

  1. Report unethical, fraudulent practices/ misconduct.

It is your responsibility as a consumer to report unethical practices, fraud or errors that occur in your dealings with your bank. For instance, Section 48 of the CCA, 2016 (as amended) stipulates that it is the customer’s responsibility to provide written notice to a credit provider where the customer disputes a particular credit or debit in a credit agreement. It is also your duty to report any form of misconduct by bank employees. It is your responsibility to ensure that you follow the redress mechanisms in place. First you must report to your bank and if your bank does not address the complaint or you are not satisfied with the response, then you could escalate the complaint to CBE’s Ombudsman at ombudsman@centralbank.org.sz.

  1. Deal with only licensed financial institutions.

It is also your responsibility to ensure that as a consumer, you only deal with licensed financial institutions. Consumers can go to the websites of the Central Bank and Financial Services Regulatory Authority (Regulators) to see a list of licensed financial institutions. Where a consumer is not sure about the status of an entity, he/she contemplates dealing with, it is their responsibility to undertake the necessary due diligence, including making an inquiry with the Regulators.  

  1. Seek clarity.

It is the consumer’s responsibility to ensure that they seek clarity when “buying” a financial product. For instance, Mrs. Simelane wants to open a savings account at Bank A and Bank A offers many savings accounts with different benefits. It is Mrs. Simelane’s responsibility to ask for clarity on the key terms, conditions and benefits of each one of the savings accounts. The customer can also request the Key Facts Statement for the account which she can use to compare with products offered by other banks.

It is clear then, that even though consumers have rights, every right granted to the consumer has a corresponding responsibility. It is therefore crucial for consumers to know their responsibilities. 

Understanding Pyramid Schemes

What is a pyramid scheme?

This is an illegal form of investment activity in which each paying participant recruits two/more further participants, with returns being given to early “investors” using money contributed by later ones. The promoter(s) purports to sell a product, whereas such is often used to disguise their pyramid structure. 

Closely related to pyramid schemes are Ponzi Schemes, also characterized with continuous recruiting. Here the promoter has no product to sells, but rather collects payments from a stream of people, promising them all the same high rate of return on a short-term investment. In the typical Ponzi Scheme, there is no real investment opportunity, and the promoter just uses the money from new recruits to pay obligations owed to longer-standing members of the program. This is typically what is generally referred to as “robbing Peter to pay Paul”.

Common signs of Pyramid/Ponzi Schemes

Members of the public should be vigilant to the following red flags:

  • Promise of high returns in a short period of time.
  • Promoter claims to have invented/have ground-breaking “new technology, products” or “special investment scheme”
  • Focus more on the recruitment of new people rather than the sale of a product or service.
  • A statement that the Company/Scheme does not have to be listed in Eswatini, since licensed in another jurisdiction.
  • Investors pressured to make quick decisions and may be advised to keep the investment a secret from financial sector regulators.
  • Promotor(s) use technical jargon, and often lacks paperwork.
  • The business model is complicated and hard to understand how the astronomical returns are generated.

A sudden/overnight change in promoter’s lifestyle and accumulation of assets, indicating spending of members’ investments for personal wealth.

How to prevent being swindled by illegal schemes? 

Though it is difficult to immediately recognize these notorious schemes, it may be helpful to:

  • Question unsolicited and extremely lucrative offers (be inquisitive).
  • Be extremely cautious of suspicious telephone calls, emails, social media adverts, etc., offering investment options by unlicensed person(s)/institution(s).
  • Conduct an in-depth due diligence research and consultation prior to investing.
  • Do a background check on the company profile and its products through searching their website, social media pages, reviews, etc.
  • Be skeptical about plans offering commissions for recruiting new distributors, especially where there seems to be no underlying product or service of economic value.
  • Diversify your assets, investments and financial institutions you invest with. 
  • Be aware of a plan that delays meeting its commitments while asking members to “keep the faith”. By their nature, pyramid schemes can never fulfill their obligations to most of their participants.

Mobile Money Scams

With technology advances and our reliance on social media, we have become vulnerable to money scams. From pop-up messages that claim we have won to fake job adverts where money for administration is required.

Fraudsters have been using Mobile money to scam people, for instance one would claim that he accidentally sent money to your number. Usually, older people are targets here and their pension money is cleaned. How can they be protected from such?

  • Always scrutinize the SMS purporting that funds have been received or sent so as to ensure that it is authentic. You can compare with other messages that you received from Mobile money. 
  • Log in to your Mobile money / email account to check the balance. Alternatively, you can call the MTN/ Eswatini Mobile to verify if payment has been made or you suspect that something is wrong.
  • Knowing what your balance is may also help should someone then say that accidentally sent funds into your account. 
  • Never give out your Mobile money PIN even if they say they are representing the services provider.

Overall, financial services consumers are urged to take the SAFE test to avoid scams. That is;

S – Stop                              

Stop, think and ask yourself:  What is this firm/ person offering? Who is contacting me? Where did they get my contact details? Who are they? Do I feel rushed to provide personal or financial information? Remember, there is no short-term advantage to making quick decisions on your longer-term financial wellbeing.                             

A – Assess 

Assess the information you are being presented with and make sure the firm is legitimate. You can check CBE or FSRA website to see if the financial institution is authorised. Even if the financial institution appears to be authorised, you should still make sure it is genuine. It’s common for scammers to pretend to be genuine by “cloning” the appearance of an authorised firm. Check for any irregularities such as misspellings and grammatical errors in the firm’s website, emails or paperwork. Call the firm using its publicly advertised phone number. 

F – Fact-check 

Fact-check the offer to make sure it is from a trusted source. Never provide your personal information or agree to send money unless you are satisfied that the firm/ person is authorised and genuine. Ask yourself: Is the financial service or product I am being offered from trusted sources? Is the transaction authentic, Is this a genuine financial product?  Does it seem too good to be true? Seek advice from someone you trust to help you make a good decision.  

E – Expose and report

You can contact the police, the financial institution, or CBE in the case of scams involving banks or FSRA for non-bank financial institution scams.