In todays’ environment, becoming customer-centric is not just a feel-good mantra, but has become a core business requirement. Being customer-centric means embedding customers at the heart of your operations. Financial institutions including banks are not an exception to this. Therefore, the Central Bank (CBE) has also seen the need for banks to embed a customer-centric culture that strives to proactively ensure fair customer treatment in all their activities.
In 2020, the Central Bank of Eswatini (CBE) took a decision to establish a Market Conduct and Consumer Protection (MCCP) Unit under its Financial Regulation Department. This was done in trying to ensure that the CBE’s oversight function is not only focused on prudential supervision, which pertains to the safety and soundness of the regulated institutions. The function of the MCCP unit is to ensure that the conduct of financial services providers is not abusive to consumers, and that there is integrity in the financial system whilst also ensuring that there is fair competition amongst the players. Consumer empowerment is a component of MCCP supervision, which addresses demand side factors such as consumer needs, behaviors and outcomes so that consumers can make more informed financial decisions. The CBE has a significant role to play in the provision of financial education to consumers. As such, CBE shall be rolling out many activities in this regard including the publication of articles as a contribution to trying to improve financial literacy in Eswatini. Today’s article is on customer rights in the banking sector.
Who is a consumer?
For a bank, a customer or consumer is a person (natural or legal) who is utilizing one or more of the services provided by the bank e.g. a deposit account, a loan account etc. It is very crucial for customers to be aware of their rights and responsibilities in the bank-customer relationship/ contract. In 2018, CBE issued a Guideline on Banking Practice (Guideline) which outlines these rights and responsibilities. Customers can cite the Guideline where they think their rights are being violated by a bank. In today’s article, the focus will be on the customer rights as further outlined below.
CBE issued a Guideline on Key Facts Statement for Deposit and Loan Accounts No.4 of 2020, which mandates banks to provide the KFS to customers prior to opening any account with a bank, be it a deposit or loan account (including a credit card or overdraft facility). Customers can use the KFS when shopping around to compare the products offered by the different banks. Customers also have a right to be informed by banks on key changes e.g. change in interest rates by CBE on prime linked loans, when customers are in default (though customers also have a duty to ensure their payments are up to date) etc. In terms of the Consumer Credit Act, 2016 customers are also entitled to one (1) free monthly statement on any credit facilities they have with a bank.
Where a customer is not satisfied with the decision of their bank on a submitted complaint, the customer also has a right to escalate the matter and lodge a complaint with CBE’s Ombudsman at firstname.lastname@example.org.
The CBE will continuously look for ways on getting it right for consumers through ensuring that banks deliver positive consumer outcomes in their interactions with customers. CBE will thus challenge regulated entities where their focus is not on the positive outcomes. This will include CBE as part of its gatekeeper role ensuring that the consumer rights as outlined above are not violated.