The Central Bank of Nigeria (CBN) has directed regulated firms to notify clients of delinquent payments prior to initiating the debt collection procedure. The goal of this directive is to guarantee debt recovery that is fair, courteous, and transparent.

The CBN emphasized the necessity for Financial Institutions to abide by Consumer Protection Principles in a document titled “Revised Consumer Protection Regulations,” which was available on its website.

It stated that ensuring Financial Institutions adhere to consumer protection standards is the main goal of the text.
The rules outlined consumer rights and sought to improve results and financial services accessibility.

The document states that starting a foreclosure should only be done as a last option after all other methods of collecting debt have been exhausted. When a debtor defaults on a loan, the bank or lender legally acquires ownership of the property.

This process is known as foreclosure.
According to the document, “Customers should be offered the option of a private sale prior to foreclosure, which must be exercised within 30 days unless the customer has waived this right.”

The Apex bank also required financial service providers to pay off loans and notify borrowers of any outstanding balances using the net revenues from foreclosures.

CBN added banks must give their customers a collateral sale report that includes information on the costs, expenses, and net proceeds, and they must take responsibility for the acts of debt recovery agents.

Additionally, the document restricted loan providers from communicating with anyone connected to a consumer. It said that “suppliers are not allowed to get in touch with friends, family, coworkers, or neighbours for any reason other than job status, address, or phone number inquiries. If the person has guaranteed the loan or granted permission to be contacted, then this regulation will not apply.”

In order to reduce fraud and errors, financial service providers were also required to protect their client’s assets, assume liability for losses brought on by security lapses, test their products with real users, and enforce controls and transaction authentication.

Financial Service Providers were mandated to set up automated transaction monitoring, alert systems, and behavioral tracking to identify and stop fraud. They also have to educate customers about potential fraud threats and scams.

The CBN stressed that service providers need to periodically notify customers about the reporting policies for illegal, fraudulent, lost, or stolen payment instruments or authentication data.

The document further stated that to avoid mistakes and duplicate transactions and protect customer data privacy and confidentiality from illegal access, financial institutions must also provide secure and user-friendly interfaces for digital financial services.

It is also required of financial providers to incorporate personal data protection into the designs of their systems or products and get consumers’ written consent before collecting and processing their personal data for particular purposes.

They should also give consumers the option to revoke their consent at any time and avoid disclosing customers’ personal information to third parties without authorized consent. They must also offer “Opt-in” and “Opt-out” alternatives for data sharing that are uncomplicated and obvious.

It further stated, “The 2019 Consumer Protection Regulations have to be reviewed in order to protect consumers’ interests and ensure better protection in the changing financial services landscape.”

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