According to news published by Punchng, the Central Bank of Nigeria (CBN) has instructed banks and other financial institutions to inform customers about outstanding debts before starting the debt collection process. This directive aims to ensure that debt recovery procedures are transparent, polite, and fair to customers.
In a document released on its website titled “Revised Consumer Protection Regulations,” the CBN noted the importance of following consumer protection principles. The regulations outline various consumer rights and aim for better outcomes and access to financial services.
One key aspect emphasized in the document is the handling of foreclosures. According to the CBN, foreclosure should only be considered as a last resort after all other methods of recovering debt have been exhausted. Customers must be given the option of a private sale before foreclosure, which must be exercised within 30 days unless the customer has waived this right.
The apex bank mandates that financial service providers (FSPs) must apply the net proceeds from foreclosures to the loan account and inform customers of the remaining balance. Banks are also required to provide customers with a detailed report on the collateral sale, including processes, expenses, and net proceeds.
The CBN also imposes restrictions on loan providers regarding contacting individuals related to a customer. Providers are prohibited from contacting 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.
Additionally, banks must safeguard customers’ assets and are responsible for losses due to control breaches. They must also test products with consumers and modify them to reduce fraud and errors. Moreover, measures and authentication for transactions must be implemented to prevent fraud.
Financial service providers are also required to install automated transaction monitoring, alert functions, and behavioral monitoring to detect and prevent fraud. Customers must be educated on fraud threats or scams, and providers must communicate procedures for reporting suspicious, unauthorized, fraudulent, lost, or stolen payment instruments and/or authentication information to consumers periodically.