The new Code of Banking Practice, recently adopted by the banking industry in Zimbabwe, embraces and promotes the basic rights of consumers in many respects. Consumers have certain fundamental rights which are inalienable. It is this principle that has cemented some of the provisions of the new Code of Banking Practice.
Clive Mphambela
What are the basic rights of consumers addressed by the Code?
In terms of the United National Guidelines on consumer rights, the Code of Banking Practice binds banks to conduct their business in a manner that promotes customers’ rights to:
lSatisfaction of basic needs — by using appropriately designed banking products.
lRight to Safety — in that the use of products and services should not cause undue harm to the customer.
lRight to be informed — There must be appropriate communication of price and other information so that consumers make reasonably informed decisions.
lRight to Choice — The public must be able to choose from a variety of players and a multiplicity of products. The banking industry promotes unfettered competition among its members.
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lRight to be Heard — Consumers are encouraged to voice their views with respect to banking issues affecting them. Every member bank has a complaints and feedback mechanism not only as required by law, but as also promoted by the Code of Banking Practice.
lRight to Redress — The code provides for a redress mechanism should any customer not be satisfied with service rendered by a member banking institution.
lRight to Consumer Education — Banks have been active in educating consumers not only about their rights as consumers, but through financial literacy and financial education initiatives, the banking industry is promoting increased awareness of banking products and services so that the public can use these from a position of knowledge.
The adoption of the new code thus places a burden of responsibility on the banks to practise good business ethics and therefore lay the basis for smart profitable and sustainable business into the future.
Why is the customers’ right to information important?
The customers’ right to information is critical in that customers must make informed and rational decisions given fair information. It is vital therefore that the Code of Banking Practice outlines the type of information to be given to customers and how this information will be delivered.
Communication in plain language
To respect customers rights to information means that the banks must take reasonable steps to ensure that the customers understand the communication being directed at them. This means that all written terms and conditions will be made as fair in substance as possible and will set out all applicable rights and responsibilities clearly and in plain language, with legal and technical language used only when necessary. When legal and technical language occurs, banks will provide additional explanations of the legal terms.
What Information is available from the Bank?
When one becomes a customer, the bank will give them the following information about its products and services:
lKey features of services and products: Clear written information explaining the key features of the bank’s main services and products. Banks will also equip staff to verbally explain the implications of those packages whenever customers visit any of their bank’s branches. lOperating of account: The bank should give customers adequate information on how their various accounts work, including: lThe stopping of cheques or other types of payment lWhen funds can be withdrawn after a deposit has been paid into the account, and when funds begin to earn interest; lWhen account details may be passed to Credit Reference Agencies lDormant accounts lUnpaid debit orders lUnauthorised overdraft
Details of Charges should be transparent
The full details of charges for basic banking services should be available to the customer on request;
This includes information on whether fees or charges are negotiable or not. Interest rates should be disclosed The bank should give the customer full information on the interest rates which apply to his /her account(s), where interest will be deducted from, or paid , and the basis on which interest is calculated. ATM charges should be disclosed Banks will notify customers of the changes to ATM charges by SMS messages and/or advertisements in the media. Details of these charges can be obtained from the banks. Penalty fees on overdrafts and fixed term products Banks undertake to inform customers of any additional charges and interest they may have to pay when:
lTheir account becomes overdrawn without prior agreement lThey exceed agreed overdraft limits lTheir loan falls into arrears lCustomers decide to settle loans early lBanks will inform customers of the charges (and the applicable amount where possible) for any other service, or product before, or when it is provided, at any reasonable time. What happens when terms and conditions change? Occasionally terms and conditions may have to be changed. The bank will give its customers reasonable notice of these changes before they become effective such that customers will have time to decide if they want to continue with the product or service, taking the charges into account, or if they want to cancel that product or service. If there have been significant changes of terms of conditions over any one year, the bank will give or send customers the new terms and conditions or summary of the changes at the last address provided by the customer. How are changes notified? If there is a change in the charges for banking services, the bank will give reasonable prior notice by either:
lLetter/statement/other personal notice or lNotice/leaflets in branches: or lSMS messages; or lMedia advertisements It is for this reason that all banks, on a monthly basis, will publish detailed schedules of their business conditions in the print media, in a bid to keep customers abreast of their business terms and conditions.
Clive Mphambela is a Banker. He writes in his capacity as Advocacy Officer for the Bankers’ Association of Zimbabwe. BAZ expressly invites stakeholders to give their valuable comments and feedback related to this article to him on [email protected] or on numbers 04-744686, 0772206913
