Monday, August 5, 2019, 02:44PM /CBN
Pursuant to the powers conferred on the Central
Bank of Nigeria (CBN) by Sections 2 (d) and 33 (1) (b) of the CBN Act, 2007 (as
amended) and Section 57 (2) of the Banks and Other Financial Institutions Act
[BOFIA] 2007, as amended, the CBN hereby issues this Guidelines on Responsible
Business Conduct, herein referred to as “the Guidelines” to give effect to the
Responsible Business Conduct Principle contained in the Consumer Protection
Framework (CPF) for institutions regulated by the CBN.
The Guidelines provide minimum standards of
business required of Financial Institutions under the regulatory purview of the
CBN to protect the rights of consumers and to hold the institutions accountable
as a result of the skewed power imbalance.
The objective of the Guidelines is to protect
consumers against the unethical and predatory practices that undermine consumer
confidence in the use of financial services. The Guidelines therefore sets out
the minimum standards expected from Financial Institutions on responsible
The Guidelines shall apply to all transactions
by financial institutions licensed and regulated by the Central Bank of Nigeria
and their agents, subsidiaries and associates. These include Commercial Banks,
Merchant Banks, Specialized Banks, Micro-finance Banks, Development Finance
Institutions, Finance Companies, Bureaux-de-Change, Primary Mortgage Banks,
Credit Bureaux, Mobile Money Operators, Payment Service Banks, Switching
Companies, Payment Solution Service Providers, Payment Terminal Service
Providers, Nonbank Acquirer, Super Agents, Mobile Money Operators, and other
licensed providers of digital financial services.
Financial Institutions shall ensure that the
provisions of the Guidelines form part of any consumer related transaction,
product or service agreement they may enter into with any other institutions
which are otherwise not regulated by CBN.
To promote good business practices, Financial
Institutions shall comply with the following general provisions.
their businesses in a responsible, professional and ethical manner.
their staff to promote competence, efficiency and professionalism in the
discharge of their duties.
clear information about products and services, features, terms and conditions
and the applicable fees and charges.
the privacy and confidentiality of consumer information.
impose any product, service or channel on consumers.
charge fees for issuance and renewal of products/services without prior request
by the consumers.
and inform consumers of the channels to make enquiries and complaints.
customers of circumstances or situations that may affect the terms of their
contract or relationship.
compel consumers to buy a product or service as a condition for the purchase of
another product or service.
all applicable fees for electronic payment services with the option to accept
or decline before a transaction is consummated. This should include a warning
that third-party charges may apply, where applicable.
Provisions of Financial Advice
To help consumers determine their financial
needs and ensure proper planning to meet the needs, Financial Institutions
- Provide consumers with
objective advice to enable them make informed decisions on suitable products to
meet their specific needs.
- Provide financial advisory
services incidental to their business activities such as advising on financing
and business strategies and structures, conducting research and economic
intelligence services, building financial models, writing business plans,
conducting private placements, arranging loan syndications and advising on
- Not charge advisory fee for
loans and other services not captured in 2 above. This is without prejudice to
the permissible activities of Merchant Banks.
To ensure that consumers’ capability to repay
credits are efficiently assessed, Financial Institutions shall comply with the
- Describe in
credit risk assessment procedures, the type and circumstances for which a
credit will be suitable, as well as clear lines of authority for approving the
- Assess the
capability of customers to repay a credit in a sustainable manner taking into
consideration the customers’ financial circumstances.
- Set clear
policies and procedures on consumer loans to ensure that customers who are
unable to meet their repayment obligations due to ill health, unemployment or
other disabilities, are treated fairly and with due consideration.
- As part of their
regular monitoring of loan performance and upon early detection of signs of
repayment difficulties, inform consumers of the importance of timely engagement
with the Financial Institutions to discuss alternative repayment measures.
- Make reasonable
efforts to offer an alternative repayment plan that is appropriate to the
customer’s changed circumstances and financial situation.
- Obtain the
credit history of consumers from the Credit Risk Management System, Credit
Bureaux and other sources of credit reference to ascertain consumers’
outstanding debt obligations and repayment history before advancing credits.
Institutions shall not compel a consumer to buy a product or service, such as
insurance or valuation service from a particular provider as a pre-condition
for the grant of a credit facility.
- Ensure that
guarantors read and understand the full nature of their commitment, potential
implication of their decisions and the maximum amount they are guaranteeing.
- Ensure that
Guarantors confirm in writing that they have either:
Sought and obtained
independent professional advice before executing the guarantee; or
obligations under the guarantee and do not need to seek any independent advice
before executing the guarantee.
10. Obtain the consent of customers to provide periodic update to their Guarantors
on the loan performance to enable them to assess the likelihood of being called
upon to discharge their commitments. 11. Issue Letter of Discharge to customers
within 5 business days after liquidation of their loans. Where the loan is
guaranteed, the Guarantor shall also be notified accordingly. 12. Notify
customers where their loan requests are declined. The reason(s) for decline
shall be provided upon request.
To ensure that debt recovery processes are
courteous and fair, devoid of undue pressure, intimidation, harassment,
humiliation or threat, Financial Institutions shall:
customers of the debt recovery procedures in loan contracts.
engage and give customers early notice of outstanding obligations prior to the
commencement of debt collection process.
foreclosures only when other reasonable attempts to reach a resolution have
customers a minimum period of 6 months from the date of notice of foreclosure,
the option of a private sale before commencing foreclosure, except where the
customer waives the right.
that the entire debt collection process is transparent and with active
participation of the customer including the foreclosure.
customers a report of sale of the asset stating the process, proceeds,
incidental expenses and the net proceeds.
that the net proceeds are immediately applied to the loan account and customers
informed of any balance.
liable for the actions of their agents engaged for the purpose of debt
pass the cost of engaging debt recovery agents to customers.
engage in any of the following
- Contact friends, employer,
relatives or neighbours of a customer for any information other than
telephone numbers or address, except where:
The person being contacted has guaranteed the loan.
The person has consented to be contacted.
The employer is required to confirm the customer’s
- Require any of the persons
listed above to offset the debt, except where the person has acted as a
Make telephone or
personal contact with customers between the hours of 8.00pm and 8.00am for the
purpose of debt recovery (unless with prior consent of the customer).
To ensure that advertisements and promotional
materials on products and services are clear and not misleading, Financial
display information that could affect consumers’ decisions.
out incentive-based marketing of products and services in an ethical and
that sales and marketing staff are properly trained and competent to perform
their functions. The staff should be knowledgeable in key features, risks and
critical terms of product offerings.
- Establish a process to
periodically check and monitor the competence and conduct of sales and
- Not tie remuneration of
marketing/sales staff to sales volume.
- Provide consumers with the
option to opt out from receiving marketing materials.
Financial Institutions shall have in place a
policy approved by the Board of Directors which documents the processes,
procedures and systems designed to ensure compliance with the provisions of the
Failure to comply with the provisions of the
Guidelines shall attract regulatory sanctions provided for by the CBN Act, the
BOFIA, other laws and regulations.
This Guidelines may be amended by the CBN, as
the need arises.
Glossary of Terms
AS USED IN THE GUIDELINES
disseminated to the public through displays, exhibitions, publications and
A person or an entity
that uses, has used or a potential user of financial products or services of
a Financial Institution.
Credit Risk Management
register maintained by the Central Bank of Nigeria.
A person or entity
that has a relationship with a Financial Institution by reason of purchase of
products or services offered by the institution.
Sale of collateral by
Letter of Discharge
A letter issued by a
Financial Institution to customers as evidence of full repayment of a credit
A short-term process
designed to boost sales by persuading customers to buy a product
Consumer Protection Department
You are kindly requested to send your comments
or observations by 13th August, 2019 to:
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