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Understanding the New Code of Banking Practice

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Consumer protection has in recent times, become an increasingly topical discussion, not only in Zimbabwe, but across the world. Following the global financial meltdown, and localised challenges in our own market, particular attention has been drawn on the need to protect consumers of financial services.

Clive Mphambela

Taking a cue from the various developments around us, the banks in Zimbabwe have recently adopted a new, revamped Code of Banking Practice. This week we thought to share some of the underlying thoughts and principles embodied in this code.

What are fundamental principles underlying the new Code of Banking Practice?

All member banks of the Bankers Association of Zimbabwe, have undertaken that they will observe various principles in their day to day interactions with the banking public. The banks have collectively agreed to:-

lAct fairly and reasonably in all our dealings with customers;

lEnsure that all banking services and products comply with the Code of Practice, even where these have their own terms and conditions;

lGive customers full information on services and products in plain language, and offer help if there is any aspect which customers may not understand;

lTake actions that foster confidence in the banking system.

lHelp customers to choose services or products to suit their needs by promoting competition an innovation;

lHelp customers to understand the basic financial implications and risks of using certain products from banks such as:

Loan products, savings and investment products, Card products payment services (including RTGS, Telegraphic Transfers and Internet Banking) Foreign exchange: electronic banking products, mortgages and debit orders/stop orders.

The Code also articulates the consequences and risks of:

Failure to comply with the KYC requirements and anti-money laundering laws, thefts/fraud unclaimed funds, shares and dividends.

What motivated banks to come up with the New Code of Banking Practice?

In short summary the Code strives to help customers to understand how their accounts work in order that the can have safe, secure, reliable banking and payment system services including virtual banking platforms.

The code also espouses the procedures bank staff should follow to reflect the commitments set out in the Code. This gives the code force and effect in protecting consumer rights.

What are the other commitments in the Code?

The code also places the responsibility on member banks to commit to the following:-

Correcting errors and handling complaints speedily.

Acting with uncompromising integrity and fairness so as to promote trust and confidence in the banking industry.

Ensure that credit criteria, products and services are based and applied solely on commercial principles and criteria, and do not discriminate against any customer on the basis of race, religion, age, marital status, sex, gender, sexual orientation, ethnic or social origin, disability, colour, conscience, belief, culture, language, birth, class, economic or social class, political affiliation save to the extent that a distinction is required or justified by any law or to the extent that factor has commercial implications or in respect of a particular target market group;
Only charge interest on monies actually owing and debited to customer accounts.

Treat customer KYC information as private and confidential, unless in instances where banks are compelled to divulge such information by law, or when banks to protect both customer and banks interests as in the case of fraud.

As much as possible, customer consent will be sought for the use of customer data for purposes of credit references.

The Code provides the option not to use customer information for marketing and promotional purposes when they have opted out of receiving unsolicited marketing communication.

How are customer complaints to be handled?

The first port of call, when a customer has a grievance is the concerned bank.

However, should any bank customer feel unsatisfied, the new code provides you with the details of the Ombudsman process for resolution of queries related to banking services should they not be satisfied with the resolution of a dispute, or with the outcome of a dispute handling process within any bank.

What are the expectations from Bank Customers?

The new Code of Banking Practice is a customer centric document that seeks to ensure the interests of customers are safeguarded.

However, because banking is an interactive process, a two way street, it is reasonable to assume that customers also have a role to play in ensuring that the code lives up to its billing. For example the Code explicitly states that:-

It is the responsibility of the customer to disclose all relevant information as part of any credit application to a bank that they may make an informed decision to grant credit to the customer.

It is the responsibility of the customer to live reasonably within their means.

Before banks are allowed by law to establish a relationship with you or from time to time during the existence of such a relationship, they are required to perform certain identification and verification steps about you.

It is a customers’ responsibility to assist their bank in performing these legal obligations to ensure that the banking relationship can lawfully be established or continue to subsist.

Customers also have the responsibility to:-

To inform the bank should any of their contact details change

To enable banks to take the necessary measures to prevent or limit fraud or theft on customers’ accounts, it is the customers’ responsibility to inform their bank as soon as possible when they discover any unauthorized activities on their account.

The Code also advises clients to take due care of their passwords, Personalised Identity Numbers (PINs) and other valuable data.
How can aspects of the Code be improved?

It is important for stakeholders to that the new Code of Banking Practice is not cast in stone.

It will remain a living document, and comments and inputs from stakeholders are encouraged to keep it alive and current.

This will ensure that banks continue to live up to the letter and spirit of the code, which is to make sure that clients are protected at all times.

Copies of the Code are available on the BAZ website www.baz.org.zw. One can also request for a copy of the Code through their bank branch manager
lClive 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 clive@baz.org.zw or on numbers 04-744686, 0772206913

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