In 2015, the Bankers’ Association of Zimbabwe (BAZ) adopted a revamped Code of Banking Practice. The code embraces and promotes the basic rights of consumers in many respects. Banks in Zimbabwe recognise and accept that consumers of bank services have certain fundamental rights which are inalienable. It is this principle that cemented some of the provisions of the Code of Banking Practice.
BY Clive Mphambela
What are the basic rights of consumers addressed by the Code of Banking Practice?
In terms of the United National Guidelines on consumer rights, the Code of Banking Practice binds banks to conduct their business in a manner that promotes the following basic customer rights.
* Right to satisfaction of basic needs — by using appropriately designed banking products.
* Right to safety — in that the use of products and services should not cause undue harm to the customer.
* Right to be informed. There must be appropriate communication of price and other information so that consumers make reasonably informed decisions.
* Right to choice. The public must be able to choose from a variety of players and a multiplicity of products. The banking industry promotes unfettered competition amongst its members.
• Right to be heard. Consumers are encouraged to voice their views with respect to banking issues affecting them. Every member bank has a complaints and feedback mechanism not only as required by law, but as also promoted by the code of banking practice.
* Right to redress. The code provides for a redress mechanism should any customer not be satisfied with service rendered by a member banking institution.
Right to consumer education. Banks have been active in educating consumers not only about their rights as consumers but through financial literacy and financial education initiatives, the banking industry is promoting increased awareness of banking products and services, so that the public can use these from a position of knowledge. The adoption of the new code thus places a burden of responsibility on the banks to practice good business ethics and, therefore, laid the basis for smart profitable and sustainable business partnerships into the future.
Why is the customer’s right to information important?
The customers’ right to information is sacrosanct. It is critical in that customers must make informed and rational decisions given fair and adequate information. It is vital, therefore, that the Code of Banking Practice outlines the type of information to be given to customers and how this information is delivered to customers.
Communication with customers should be in plain and simple language
To respect customers rights to information means that the banks must take reasonable steps to ensure that the customers understand the communication being directed at them. This means that all written terms and conditions for products and services should be made as fair in substance as possible and should set out all applicable rights and responsibilities clearly and in plain language, with legal and technical language used very sparingly and only when absolutely necessary. When legal and technical language occurs, banks should provide additional explanations of the legal terms.
What Information should customers expect from the bank?
When one becomes a customer of the bank, the bank will give them the following information about its products and services:
* Key features of services and products: Clearly written information explaining the key features of the bank’s main services and products. Banks have also taken steps to equip staff with skills to verbally explain the implications of those product packages whenever customers visit any of their bank’s branches.
* Terms of operating of an account:
The bank should give customers adequate information on how their various account classes work, including:
* The stopping of cheques or other types of payment, where these are applicable.
* When funds can be withdrawn after a deposit has been paid into the account, and when funds begin to earn interest;
* Whether or not customer account details may be passed to credit reference agencies.
* Conditions for dormant accounts
* Charges for unpaid debit orders
* Charges for unauthorised overdrafts and so on.
Details of charges should be transparent
The full details of charges for basic banking services should be available to the customer on request;
This includes information on whether the fees or charges are negotiable or not. Most importantly;
Interest rates applicable on borrowings and savings should be clearly disclosed.
The bank should give the customer full information on the interest rates which apply to his/her account(s), where interest will be deducted from, or paid, and the basis on which interest is calculated.
ATM charges should be disclosed
Banks will notify customers of the changes to ATM charges by SMS messages and/or, advertisements in the media. Details of these charges can be obtained from the banks.
Penalty fees on overdrafts and fixed term products
Banks undertake to inform customers of any additional charges and interest they may have to pay when:
* Their account becomes overdrawn without prior agreement
* They exceed agreed overdraft limits
* Their loan falls into arrears
* Customers decide to settle loans early
* Banks will inform customers of the charges (and the applicable amount where possible) for any other service, or product before, or when it is provided, at any reasonable time.
What happens when terms and conditions change?
Occasionally terms and conditions may have to be changed. The bank will give its customers reasonable notice of these changes before they become effective such that customers will have time to decide if they want to continue with the product or service, taking the charges into account, or if they want to cancel that product or service.
If there have been significant changes of terms of conditions over any one year, the bank will give or send customers the new terms and conditions or summary of the changes at the last address provided by the customer.
How are changes notified?
If there is a change in the charges for banking services, the bank will give reasonable prior notice by either;
* Letter/statement/other personal notice or
* Notice/leaflets in branches, or
* SMS messages; or
* Media advertisements
It is for this reason that all banks, on a monthly basis will publish detailed schedules of their business conditions in the print media, in a bid to keep customers abreast of their business terms and conditions. The Reserve Bank has also issued a set of detailed consumer protection guidelines which banks should religiously follow. If for any reason a bank customer is aggrieved by the service offered by his or her bank, the guidelines require that first the client seeks redress of his grievance at the bank branch concerned.
Typically, customer service personnel at the bank are well-trained to handle all customer queries. Should the bank be unable to satisfactorily resolve that matter, bank customers are free to approach BAZ for guidance and the law also allows them as a last resort to approach the regulators for their intervention.
Clive Mphambela is a Banker. He writes in his capacity as Advocacy Officer for the Bankers Association of Zimbabwe. BAZ expressly invites stakeholders to give their valuable comments and feedback related to this article to him on firstname.lastname@example.org or on numbers 04-744686, 0772206913