CBN Tells Banks To Notify Customers Before Debt Recovery Moves

By Clement Alphonsus
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Dr. Olayemi Cardoso (Governor, Central Bank of Nigeria (CBN)

The Central Bank of Nigeria has announced its instructions to regulated entities to provide customers with notices of outstanding obligations before beginning debt collection.

This was disclosed by the CBN in a document released on Thursday on its website titled “Revised Consumer Protection Regulations.”

It said the essence of the document is to ensure financial institutions follow consumer protection principles.

The regulations outline consumer rights and aim for better outcomes and access to financial services.

The document also explained that foreclosures should only be initiated as a last resort after other recovery options have failed..

In the document, “Customers should be given the option of a private sale before foreclosure, which must be exercised within 30 days unless the customer has waived this right."

Similarly, the apex bank authorised that financial service providers must apply the net proceeds from foreclosures to the loan account and inform customers of the remaining balance.

The CBN stressed that banks must provide customers a report on the collateral sale, stating process, expenses, and net proceeds noting that banks are responsible for the actions of debt collection agents.

The document outlines restrictions for loan providers in terms of contacting individuals related to a customer.

“Providers are not allowed to contact friends, employers, relatives, or neighbors for any information other than employment status, telephone numbers, or address. The only exception is if the person has guaranteed the loan or has given consent to be contacted," it stated.

Additionally, banks are mandated to safeguard customers’ assets and are responsible for losses due to control breaches; test products with consumers and modify to reduce fraud/errors and implement measures and authentication for transactions.

The document further showed that the providers must communicate procedures for reporting suspicious, unauthorised, fraudulent, lost, or stolen payment instruments and/or authentication information to consumers periodically.

Also, the CBN stated that banks must protect consumer data privacy and confidentiality from unauthorised access and be responsible for any acts or omissions in this regard.

The providers must incorporate personal data protection into their product or system designs; they must obtain written consent from consumers to collect and process their personal data for specific purposes, and allow them to withdraw their consent at any time and are prohibited from sharing consumers’ personal data with third parties without their express consent, and must provide clear and simple “Opt-in” and “Opt-Out” options for data sharing.

It added, “Safeguarding the interests and ensuring greater protection of consumers in the evolving financial services landscape necessitated the review of the 2019 Consumer Protection Regulations."