CBN and banks’ excessive charges

THE Central Bank of Nigeria (CBN), in a seemingly chest-thumping fashion, announced recently that it had recouped for various bank customers, about N50 billion fleeced from their accounts in the last three years by some Deposit Money Banks (DMBs). The staggering sum represents excess and spurious charges passed to customers’ accounts in contravention of the CBN guidelines on approved charges. The unsettling angle to this ugly development is that many of the specious charges were mistakes of the heart rather than those of the head and so were patently fraudulent.

The unethical and unprofessional practices by some DMBs would appear to have come to the fore between the late 80s and the mid 90s when a number of DMBs came on board with razzmatazz to literally redefine the banking landscape in the country. A common feature, then, was the apparent jettisoning of conservatism as a core value which hitherto underlined the mode of operation of banks. The new DMBs, rightly tagged new generation banks, were outlandishly flamboyant. Many believed that they started cheating their customers under various guises in order to fund their ostentatious dispositions which legitimate income could hardly support. And since then, the situation has never remained the same. It is saddening that even the ‘old banks’ that had over time earned customers’ trust have also been caught in the web of professional misconduct which excessive bank charges represent.

Sadly, the N50 billion refund to customers by DMBs at the instance of the CBN will pale into insignificance if the totality of illegal charges to customers’ accounts are properly factored and reckoned. What gets to the CBN’s attention are a few complaints about excess charges that involve several millions of naira or foreign currencies. Mostly, such complaints are those identified by consultants hired by bank customers to screen their account statements and it is when the identified anomalies could not be settled amicably between the DMBs and their customers that the CBN is usually petitioned. The preponderance of other objections, including excess charges in a few thousand or hundreds of naira,  repeated account management fees, cost of multiple short message service (SMS) alert for the same transaction, unjustified Automated Teller Machine (ATM)-related transactions

and so on do not get reported. The reason is simple. The amounts of money involved for a customer could hardly justify the cost and time to be expended on seeking redress.

However, when these illegal but regular charges are collated for all bank customers, the filthy lucre is quite huge. And in the few cases of refund determined by the CBN,  full restoration of customers’ money was not achieved because the time value of money was often discounted. There is an assumption of parity between the value of a million naira stolen from customer’s account three years ago and refunded today when, in reality, the real value has been affected by inflationary trends. This is not acceptable. Thus, while we commend the CBN for its efforts in curtailing the excesses of DMBS and protecting the interest of customers, the truth must be told that it is merely scratching this fundamental challenge on the surface.  And we dare say the solution does not lie in evolving a strategy to rein in the menace of banks defrauding their customers but to craft and implement a policy initiative that will actually put paid to it.

Banking is a highly regulated business that is based on trust and every stakeholder in that critical business is aware of this. And in the face of veritable indications that trust is being misplaced continuously, supervisory, regulatory and control mechanisms have to be stepped up. Such mechanisms should not only ensure that all manners of infractions that border on short-changing customers are automatically captured, the sanction grid, in addition to the refund of  customers’ stolen funds,  should be severe enough to make banks  think twice before setting out on any fraudulent mission. In this regard, the CBN should stand up to be counted.

It is believed in many quarters, and perhaps rightly so, that the CBN is in pole position to stop the malpractices if it really wants to, given the enormous power it wields over the banks in the exercise of its supervisory and regulatory mandate. The apex bank issues licences to DMBs and it can revoke same within the precinct of the law. Erring members of the board of any of these banks can be removed or the entire board sacked depending on the type and gravity of infractions. It is time the CBN began to combine these powers with appropriate deployment of technology to detect, investigate and severely punish every shade of corporate larceny within the banking sector.

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