In a bid to enhance transparency and fairness in the debt recovery process, the Central Bank of Nigeria (CBN) has instructed regulated entities, particularly banks, to notify customers of outstanding obligations before commencing debt collection.
This directive was issued by CBN Governor, Dr. Olayemi Cardoso, and is outlined in the revised Consumer Protection Regulations released by the apex bank on Thursday.
The regulations aim to ensure that financial institutions adhere to consumer protection principles, safeguarding customer rights and promoting better outcomes and access to financial services.
According to the document, banks are required to exhaust all available recovery options before resorting to foreclosures, which should only be initiated as a last resort. Furthermore, customers should be given the opportunity for a private sale before foreclosure, with a 30-day window to exercise this right unless waived by the customer.
The net proceeds from foreclosures must be applied to the loan account, and customers should be informed of the remaining balance. Additionally, banks are mandated to provide customers with a detailed report on the collateral sale, including the process, expenses, and net proceeds.
In terms of debt collection practices, the regulations stipulate that financial service providers (FSPs) are prohibited from contacting individuals related to a customer, except for specific information related to employment status, telephone numbers, or address. Contacting friends, employers, relatives, or neighbors for any other purpose is strictly prohibited, except in cases where the individual has guaranteed the loan or provided consent.
Moreover, banks are required to ensure the security and confidentiality of customer data, implementing measures to prevent unauthorized access and safeguard consumer privacy. This includes obtaining written consent from consumers to collect and process their personal data for specific purposes and providing clear options for data sharing, including “Opt-in” and “Opt-Out” choices.
The revised regulations underscore the CBN’s commitment to enhancing consumer protection in the financial services sector, particularly in light of the evolving landscape of digital financial services. By promoting transparency, fairness, and data privacy, the CBN aims to foster trust and confidence among consumers while ensuring their interests are safeguarded.
Overall, these measures are expected to contribute to a more robust and consumer-friendly financial ecosystem, ultimately benefiting both customers and financial institutions alike.