Until fairly recently in Nigeria, the subject of protecting consumers in the financial services sector was frankly regarded as subordinate to prudential regulation, that is, ensuring the stability and soundness of the financial system. Consequently, there were scant rules to establish consumer rights and entitlements although this was widely accepted to fall within the mandate of the market regulators.
In the banking sector, the tide began to turn with the rapid adoption and use of technology-based channels such as mobile, internet and electronic payments and this trend has certainly continued since the onset of the financial inclusion drive.
Initially, the Central Bank of Nigeria (CBN) implemented a product-by product roll-out of consumer protection rules.
But when the Consumer Protection Framework (CPF) took effect in 2016, it clearly signalled the CBN's intention to entrench common consumer protection rules across the banking sector regardless of financial product or provider.
However, the CPF, which presents nine consumer protection principles, is not actionable. Consequently, the CBN is now poised to introduce detailed rules that will not only align with the CPF but also be reinforced by sanctions in the event of non-compliance by a regulated entity. An example in this regard is the draft Guidelines on Disclosure and Transparency
Important innovations under the proposed Guidelines include the mandatory use of standard documentation in approved formats and the introduction of compulsory cooling off periods so as to allow a banking customer to cancel any signed contract within a stated period without penalty.
For analysis of other changes on disclosure and transparency being proposed by the CBN, read DIN's comments on the draft Guidelines on Disclosure and Transparency.
Further reading: the Revised National Financial Inclusion Strategy (2018)