Bank charges are fees that banks impose on their customers for using their services. They vary depending on the type of service and the bank. Some of the common bank charges include ATM fees, overdraft fees, and maintenance fees.
WHY DO BANKS CHARGE FEES?
Banks are businesses that charge fees to make a profit. They use the fees to cover their operational costs, such as maintaining their computer systems and staffing their branches. Banks also charge fees to discourage customers from engaging in certain activities, such as overdrawing their accounts.1
In addition, banks in accordance with Basel III – an international regulatory framework for the regulation, supervision, and risk management of the banking sector, and the Central Bank of Nigeria's requirements are expected to maintain certain capital and liquidity positions to guard against the risk of financial shocks.
The CBN Revised Guide to Bank Charges 2017 (CBN Guide) which took effect January 1, 2020, clearly specifies allowable charges for all banking services.
WHAT THE LAW SAYS
The Central Bank of Nigeria Act 2007 specifies in Section 33 sub-section 1b that "In addition to any of its powers under this Act, the Bank may issue guidelines to any person and any institution under its supervision."
The CBN in providing guidance thus commenced the Banker's Tariff now popularly called "Guide to Bank Charges" in 2004 with the intent to provide a standard for the application of charges on various types of services rendered by the customer. This guide is subject to periodic review and updates in line with changes within the business2
TYPES OF BANK CHARGES
1. Account Maintenance: This applies majorly to current accounts for effective management
2. Transactional Charges: These are charges paid when banks assist in carrying out specific transactions such as loans, printing of account statements, and transferring foreign currency. Some of these charges include:
- Charges on overdraft: These charges are levied when a customer overdraws an amount beyond his credit balance
- Foreign Exchange Transaction: These are charges made on transactions done in foreign currency
- Charges on Handling Document: Fees paid for the cheque booklet, the printing of statements, etc. fall under this category.
- Electronic banking charges: As banks introduce electronic products and digital channels to enhance easy transactions, they charge for the same so as to recoup the monies spent in facilitating and maintaining the service. Some of these charges include Token Fees, Card issuance and maintenance fees, Funds Transfer Charges, and Automated Teller Machine (ATM) transaction charges.3
THE RIGHTS OF CUSTOMERS IN NIGERIA
1. The Right to be informed: A bank customer has a right to disclosure of information from the bank on goods and services the bank offers. The information must be relevant and truthful. Your bank must explain to your understanding all contractual terms and charges prior to the consummation of any agreement or contract. This right enables customers to have relevant information in order to make rational choices. It amounts to a breach of your right if your bank fails to provide this information or deliberately misleads you in any way.
2. The Right to choose: You have a right to select from the range of products and services made available by your bank at competitive prices. This means that as a customer, you can, at all times, decide on the product or service to accept/purchase and the ones to decline
3. The Right to safety: This right requires a bank to guarantee all its customers a secure and conducive banking environment devoid of threats to their safety and health. You have the right to be reasonably protected from accidents while on the premises of your bank.
4. The Right to privacy and confidentiality: As a bank customer, you have the right to freedom from disclosure of your account details by the bank as well as intrusion into your account by third party. In other words, your bank must not divulge your account information to a third party; the bank must also protect your information from unauthorized access by a third party.
5. The Right to Redress: A bank must provide its customers a redress mechanism to express their displeasure or grievance. The mechanism must be free, accessible, transparent, timely, and convenient. You have a right to an efficient complaints management system through which you can lodge complaints against your bank. You also have the right to be kept abreast of the resolution process (acknowledgment, feedback, updates, explanation) and ultimately, the basis of the decision. Where you are not satisfied with the decision of your bank, you have the right of review either by your bank, the CBN, or the court4
LEGAL REMEDIES AVAILABLE TO A BANK CUSTOMER IN NIGERIA
The general principle in law is that where there is a wrong, there should be a remedy. This also goes to a breach of contractual duties of a bank to its customers, as there is usually a remedy at law for the breach of contract by one party.
The following are remedies available to a bank customer in Nigeria:
- Lodge a complaint: If there is a complaint against a bank, the
complaint must be made at the bank/branch where the issue
originated. This would be resolved within some weeks5.
However, if the Bank/Financial Institution fails to respond within
2 weeks or 30 days as the case may be, complaints can be directed
to the Consumer Protection Department (CPD) of the CBN
- Damages: This is a monetary compensation that is obtainable in a civil matter. In FBN v. PAUL, where the respondent's account with the appellant bank was debited with an illegal withdrawal in the sum of N3,000,000 which he was only informed upon his inquiry, and he was assured by the appellant that the money would be returned to his account at the end of the month. The respondent noticed foul play at the end of the month when the money was not returned, and commenced an action before the court for the return of his money illegally withdrawn without his authorization. The court held that the respondent was entitled to the award of damages claimed by him against the appellant, including exemplary damages as was awarded to him by the trial court.6
CONCLUSION
It is paramount to note that bank charges will remain for a long time, especially in this clime; Banks can however be more responsible and desist from entrapping and exploiting customers, by improving their customer service. The best thing for the customer on the other hand is to stay informed, while regulatory bodies ensure to do more in educating consumers and punish banks that fail to comply with its guidelines.
Footnotes
1. Faster Capital, "Bank Charge: Banks and Charges; Demystifying Returned Payment Fees", https://fastercapital.com/content/Bank-charge–Banks-and-Charges–Demystifying-Returned-Payment-Fees.html, accessed on June 10, 2024.
2. There have been changes made in the 2013 and 2017 Guide to Bank Charges.
3. Proshare Economy, "Bank Charges-Roles, Rights and Responsibilities", [https://proshareco.bluebooktech.com:44312/uploads/Others/News/e9a8a8eb-cb26-40f7-bd72-41e8c0c3f87c.pdf], accessed on June 10, 2024
4. CBN, "Bank Customers' Bill of Rights and Duties", https://www.cbn.gov.ng/Devfin/Bank_Customers_%20Bill_of_%20Rights.pdf, accessed on June 10, 2024
5. CBN, "How to lodge complaints", https://www.cbn.gov.ng/Devfin/How_Lodge_Complaints.pdf], accessed on July 4, 2024
6. "Fundamental Rights of a Ban's Customers in Nigeria", https://koriatlaw.com/fundamental-rights-of-a-banks-customers-in-nigeria/, accessed on June 10, 2024
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.