Consumers are people or organizations that buy products or services and as such, they play an
• important role in the economic system of a country. Consumers have rights which are protected by legislation and such legislation is becoming more severe in many countries of the world.
Listed below are some of the rights of consumers:
Right to make a choice: there should be access to a range of good products and services which are competitive in terms of pricing. A consumer should not be forced to purchase products or services he or she does not need.
- Right to education as a consumer: avenues should be created for consumers to acquire the skills needed to become adequately informed.
- Right to get value for money: optimum value must be obtained from products and services purchased by consumers.
- Right to seek redress: a consumer who is not satisfied with the products or services purchased must have a chance to seek redress.
- Right to accurate and timely information: there should be readily available and accurate information to help informed consumer choose rightly and protect them from advertisement that can mislead or deceive.
- Right to safety: consumers must be protected from products, services and production processes that are dangerous.
- Right to be represented: A consumer must be heard and well represented at various gatherings where policies and regulations which affect consumers are made.
- The creation and implementation of a consumer protection system at a financial institution is both imperative in the protection of users of such institution and also extremely important in ensuring the soundness and adequacy of the institution’s business. As a result, consumer protection must:
- Ensure adequate management of customer’s information so as to prevent the leakage of information;
- Provide timely, appropriate and adequate explanations to customers in relation to credit transactions, deposit and also sales of products Ensure appropriate and timely processing of customers complaints, inquiries and also consultation requests;
Ensure the appropriateness of the establishment of outsourced operations where the financial institution’s business is outsourced and to ensure accurate management of customer’s information;
Ensure appropriate management of other operations as determined necessary by a financial institution for the protection of customers.
Furthermore, the Central Bank of Nigeria (CBN) issued a circular in 2019 on Consumer Protection Regulations which is aimed at boosting consumer confidence in the financial services industry and to further promote stable financial system, growth and innovation. The Regulations are to improve adequate compliance with Consumer Protection Framework (CPF which will guarantee efficient Customer Service Delivery; Disclosure and Transparency; Market Discipline; and Complaint Handling and Redress.
As a result, all financial institutions regulated by CBN are enjoined to ensure immediate development of internal policies that comply with the Consumer Protection Regulations and ensure approval by their respective Board of Directors.
The approved policies which shall have detailed plans for consumer protection, education and enlightenment will thereafter be forwarded to the Director; Consumer Protection Department, CB on or before March 31, 2020.
Consequently, Internal auditors are to ensure that proper systems are in place for the appropriate compliance of these regulations because, according to the CBN: “Penalties for violation of the Guidelines by Institutions shall be applied as provided below:
- Non-resolution of complaints within prescribed timelines – A penalty of N500,000.00 per complaint per week while the infraction subsists.
- Non-acknowledgment of complaints from customer or non-issuance of tracking numbers –
- N2,000,000.00 per complaint.
Non-response to request or failure to comply with
CB directive – A penalty of N2,000,000.00
False or non-rendition of Returns/Reports – N100,000.00, and in addition, N10,000 for each day the infraction continues.
Persistent breach of regulations – Administrative sanctions on responsible officers), including issuance of warning letters and any other statutory sanctions on the officers) or Institution.
These maw be in addition to the sanctions prescribed in this Section of the Regulation.
Failure to comply with other provisions of the Regulations not specified above shall attract sanctions provided in the CB Act, the BOFIA, other enabling laws and regulations.”
Therefore, the list below are some of the roles that must be played by Internal Audit in ensuring adequate compliance with the Consumer Protection.
Framework for Financial institutions
Hasten the resolution of complaints by consumers and pay compensation where appropriate;
Ensure effective consumer risk management framework is in place;
Ensure prompt rendition of consumer complaints returns/report;
Make sure timely, accurate, detailed and clear information on financial products and services are
alwavs provided to consumers to assist them in
making informed decisions;
Monitor the conspicuous display of specific and current information (such as certificate of incorporation, banking license, interest rates, foreign exchange rates, helpdesk contact details etc) in the banking hall or customer engagement