- Additionally, the document emphasizes that foreclosures should only be pursued as a last resort after exhausting other recovery options
The Central Bank of Nigeria has mandated regulated entities to issue notices of outstanding obligations to customers before initiating debt collection, emphasizing transparency, courtesy, and fairness in the debt recovery process.
This directive is part of the “Revised Consumer Protection Regulations” released on Thursday, aiming to ensure financial institutions adhere to consumer protection principles, outlining rights and promoting improved outcomes and access to financial services.
Additionally, the document emphasizes that foreclosures should only be pursued as a last resort after exhausting other recovery options.
Foreclosure is the legal process in which the ownership shifts to the bank or lender if the debtor fails to pay the loan.
“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,” the document stated.
The apex bank further mandated that financial service providers must apply the net proceeds from foreclosures to the loan account and inform customers of the remaining balance.
The CBN added that banks must give 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.
It stated, “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.”
Additionally, banks must 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.
FSPs are also mandated to install automated transaction monitoring, alert functions, and behavioural monitoring to detect and prevent fraud; customers must also be educated on fraud threats or scams.
The document added that the providers must communicate procedures for reporting suspicious, unauthorised, fraudulent, lost, or stolen payment instruments and/or authentication information to consumers periodically.
The apex bank requires financial institutions to offer secure and user-friendly interfaces for digital financial services to prevent errors and double transactions.
The CBN added that banks must protect consumer data privacy and confidentiality from unauthorised access and be responsible for any acts or omissions in this regard.