The Central Bank of Nigeria has instructed regulated entities to provide customers with notices of outstanding obligations before beginning debt collection.
This is to ensure that the debt recovery process is transparent, courteous, and fair.
CBN said this in a document released on Thursday on its website titled “Revised Consumer Protection Regulations.”
It noted that the essence of the document is to ensure financial institutions follow consumer protection principles.
The regulations outline consumer rights and aim for better outcomes and access to financial services.
The document states that foreclosures should only be initiated as a last resort after other recovery options have failed.
Foreclosure is the legal process in which the ownership shifts to the bank or lender if the debtor fails to pay the loan.
“Customers should be given the option of a private sale before foreclosure, which must be exercised within 30 days unless the customer has waived this right,” the document said.
The apex bank further mandated that financial service providers must apply the net proceeds from foreclosures to the loan account and inform customers of the remaining balance.
The CBN added that banks must give customers a report on the collateral sale, stating process, expenses, and net proceeds noting that banks are responsible for the actions of debt collection agents.
The document outlines restrictions for loan providers in terms of contacting individuals related to a customer.
Additionally, banks must safeguard customers’ assets and are responsible for losses due to control breaches; test products with consumers and modify to reduce fraud/errors and implement measures and authentication for transactions.
FSPs are also mandated to install automated transaction monitoring, alert functions, and behavioural monitoring to detect and prevent fraud; customers must also be educated on fraud threats or scams.
The document added that the providers must communicate procedures for reporting suspicious, unauthorised, fraudulent, lost, or stolen payment instruments and/or authentication information to consumers periodically.
The apex bank requires financial institutions to offer secure and user-friendly interfaces for digital financial services to prevent errors and double transactions.
The CBN added that banks must protect consumer data privacy and confidentiality from unauthorised access and be responsible for any acts or omissions in this regard.
