Notify customers before debt recovery moves, CBN tells banks

Before starting debt collection, regulated entities are required by the Central Bank of Nigeria to notify their customers of any outstanding obligations.

This is to guarantee an open, cordial, and equitable debt recovery procedure.

This was mentioned by CBN in a document titled "Revised Consumer Protection Regulations" that was posted on its website on Thursday.

It was mentioned that the document's main goal is to guarantee that financial institutions abide by consumer protection laws.

The rules set forth the rights of consumers and strive for improved results and financial services accessibility.

According to the document, foreclosures ought to be started as a very last resort following the failure of other methods of recovery.

In the event that the debtor is unable to make payments, the bank or lender may proceed with a foreclosure.
The document said that unless the customer has waived this right, they should be offered the opportunity to participate in a private sale prior to foreclosure. This option must be used within 30 days.
Financial service providers are required by the apex bank to apply the net proceeds from foreclosures to the loan account and notify customers of the outstanding balance.

The CBN further stated that banks are accountable for the conduct of debt collection agencies and that they must provide clients with a report on the collateral sale that details the costs, procedures, and net proceeds.
The document specifies limitations on loan providers' ability to get in touch with a customer's relatives.

It said, "Providers are not permitted to contact friends, employers, relatives, or neighbours for any reason other than to inquire about the status of their employment or phone numbers. or address. The only exception is if the person has guaranteed the loan or has given consent to be contacted.”
Furthermore, banks are accountable for losses resulting from control breaches, have to protect their customers' assets, test products with customers, make necessary modifications to reduce fraud and errors, and put policies and authentication in place for transactions.

FSPs are required to implement automated transaction monitoring, alert systems, and behavioural monitoring in order to identify and stop fraud. Additionally, customers need to be made aware of potential fraud threats and scams.

According to the document, providers also need to periodically inform customers about the procedures for reporting any suspicious, unauthorised, fraudulent, lost, or stolen payment instruments and/or authentication information.

In order to avoid mistakes and duplicate transactions, the central bank mandates that financial institutions provide safe and intuitive digital financial services interfaces.
The CBN further stated that banks are accountable for any actions or inactions in this area and are required to safeguard customer data privacy and confidentiality from unauthorised access.

In order to collect and process customers' personal data for specific purposes, providers must obtain written consent from customers. They must also allow customers to withdraw their consent at any time. Providers are also prohibited from sharing customers' personal data with third parties without the customers' express consent, and they must clearly and simply provide “Opt-in” and “Opt-out” options for data sharing.

The 2019 Consumer Protection Regulations have to be reviewed in order to "protect the interests and ensure greater protection of consumers in the evolving financial services landscape," the statement continued.