Rights of a customer in the bank-customer relationship

In todays' environment, becoming customer-centric is not just a feel-good mantra, but has become a core business requirement. Being customer-centric means embedding customers at the heart of your operations. Financial institutions including banks are not an exception to this. Therefore, the Central Bank (CBE) has also seen the need for banks to embed a customer-centric culture that strives to proactively ensure fair customer treatment in all their activities.

In 2020, the Central Bank of Eswatini (CBE) took a decision to establish a Market Conduct and Consumer Protection (MCCP) Unit under its Financial Regulation Department. This was done in trying to ensure that the CBE's oversight function is not only focused on prudential supervision, which pertains to the safety and soundness of the regulated institutions. The function of the MCCP unit is to ensure that the conduct of financial services providers is not abusive to consumers, and that there is integrity in the financial system whilst also ensuring that there is fair competition amongst the players. Consumer empowerment is a component of MCCP supervision, which addresses demand side factors such as consumer needs, behaviors and outcomes so that consumers can make more informed financial decisions. The CBE has a significant role to play in the provision of financial education to consumers. As such, CBE shall be rolling out many activities in this regard including the publication of articles as a contribution to trying to improve financial literacy in Eswatini. Today's article is on customer rights in the banking sector.

Who is a consumer?

For a bank, a customer or consumer is a person (natural or legal) who is utilizing one or more of the services provided by the bank e.g. a deposit account, a loan account etc. It is very crucial for customers to be aware of their rights and responsibilities in the bank-customer relationship/ contract. In 2018, CBE issued a Guideline on Banking Practice (Guideline) which outlines these rights and responsibilities. Customers can cite the Guideline where they think their rights are being violated by a bank. In today's article, the focus will be on the customer rights as further outlined below.

Customer rights

1. Right to be informed - Customers have a right to full disclosure from their bank on services that the bank offers. This information should be accurate and timely. For example, in the case of a loan, the bank has the responsibility to share clearly, what the potential loan will entail. That is, the key terms and conditions including fees, relevant interest rates, timing of payments, insurance cover and consumer rights and obligations in relation to that etc. This information should be included in a Key Facts Statement (KFS).

CBE issued a Guideline on Key Facts Statement for Deposit and Loan Accounts No.4 of 2020, which mandates banks to provide the KFS to customers prior to opening any account with a bank, be it a deposit or loan account (including a credit card or overdraft facility). Customers can use the KFS when shopping around to compare the products offered by the different banks. Customers also have a right to be informed by banks on key changes e.g. change in interest rates by CBE on prime linked loans, when customers are in default (though customers also have a duty to ensure their payments are up to date) etc. In terms of the Consumer Credit Act, 2016 customers are also entitled to one (1) free monthly statement on any credit facilities they have with a bank.

• Right to choose - Customers are at liberty to select from the range of services offered by the bank or even to choose to bank with another institution. They can thus choose which services to accept or decline and if not satisfied with a particular product or service, they can terminate the contract provided all outstanding commitments are cleared.

• Right to safety - This right refers to banks guaranteeing all its customers a secure and conducive banking environment devoid of threats to their safety. This not only talks to physical branches, but all banking channels and platforms (including digital platforms).

• Right to redress - this refers to customers having a right to an efficient complaints management system through which they can lodge complaints against their bank. They also have the right to be kept abreast of the resolution process (acknowledgement, feedback, updates, explanation) and ultimately, basis of decision. Banks must thus provide their customers with a redress mechanism to express their displeasure or grievance. The mechanism must be free, accessible, transparent, timely and convenient.

Where a customer is not satisfied with the decision of their bank on a submitted complaint, the customer also has a right to escalate the matter and lodge a complaint with CBE's Ombudsman at [email protected].

• Right to be treated fairly - This right prohibits banks from discriminating against customers on grounds of gender, age, religion, physical ability etc. while offering products and services. However, they can continue to have certain special products, which are specifically designed for members of a target market group or may use defensible, commercially acceptable economic rationale for discriminating between its customers.

• Right to confidentiality - Banks are duty-bound to keep customers' personal information confidential, unless the disclosure is required by law or customers have given their consent.

• Right to consumer education - customers should be provided with knowledge needed to make informed and confident financial decisions to enhance their economic well-being. Banks should thus play their part on this and can partner with other stakeholders including the CBE in trying to improve customers' financial literacy.

The CBE will continuously look for ways on getting it right for consumers through ensuring that banks deliver positive consumer outcomes in their interactions with customers. CBE will thus challenge regulated entities where their focus is not on the positive outcomes. This will include CBE as part of its gatekeeper role ensuring that the consumer rights as outlined above are not violated.

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