In spite of sustained complaints by Nigerians and repeated warnings by the Central Bank of Nigeria to Deposit Money Banks against illegal and arbitrary charges on customers’ accounts, there are fresh indications of an upsurge in the practice by majority of Nigerian banks.
And the new trend is more worrisome going by investigations carried out by The Point.
In an apparent bid to cut cost of operations and, perhaps, shore up dwindling capital base under the prevailing economic conditions, most of the banks have not only continued to introduce all sorts of unapproved charges under different names, they now also hide under the CBN-approved charges to indiscriminately fleece their largely unsuspecting customers without a care.
The list of some of the illegal charges include short message services alert fee, hall congestion fees, Automated Teller Machine card maintenance fee, account maintenance charges, money transfer charges, monthly ledger fees, monthly alert fee, over bloated cheque maintenance charge, and air time SMS alert fee, among others.
As a result, millions of hapless customers have been at the end of the stick, losing their hard-earned money to the unwholesome practices and not knowing who or where to channel their complaints.
For instance, Chinedu Okonkwo, who operates savings account with two different banks, told the story of how his account balance in one of the banks has been reducing progressively owing to all manner of operational charges in spite of the fact that he has not had cause to withdraw money from the account in the last five months.
“I have been getting some funny, funny deduction alerts.First, I do get an alert notifying me of interest credited to the account. That is then followed by alerts notifying of other deductions, which total is usually in multiples of the accrued interest. The implication is that I now have less than the money I left in the account as my balance,” Okonkwo said.
In a similar vein, a customer told The Point of how he left a balance of N7, 000 naira in a salary account with Union Bank, having changed job and opened a fresh salary account with another bank on the instruction of the new workplace. To his dismay, without making further withdrawals from the account, the bank’s numerous deductions reduced the N7,000 to about N300 over time.
“To cut cost of operations and, perhaps, shore up dwindling capital base under the prevailing economic conditions, most of the banks have not only continued to introduce all sorts of unapproved charges under different names, they now also hide under the CBNapproved charges to indiscriminately fleece their largely unsuspecting customers without a care”
An embittered customer of one of the old generation banks, Edoboh Demure, who is an electrical engineer, also related his experience.
“Just this morning, I received N100 monthly fee debit alert from First Bank. I called my branch immediately and I was told it is a charge just implemented by the bank. I can’t just understand why banks will wake up and decide to start charging customers all sort of illegal fees. I operate a savings account with First Bank and I must confess I am not happy with the illegal deductions on my account,” Demure said.
A look at CBN’s revised Guide to Bank Charges, produced after a review in consultation with all banks and discount houses, Bankers’ Committee, financial experts and other stakeholders, for instance, shows that the apex bank cancelled the N100 monthly ATM card maintenance fee introduced by some banks in the past and pegged the fee at N100 annually. It also pegged the mandatory cost of Short Message Service alert at N4 per subject.
But majority of the banks have been flouting this directive. Investigations revealed that many customers are charged far in excess of N4 by their banks for SMS. Some banks even send SMS twice to notify customers of a single operation or transaction on accounts. And in cases where customers have differed and instructed their banks to stop the SMS notifications, having also subscribed to notifications by electronic mails, such directives have been ignored completely.
Another sore area of sharp bank practice is on electronic transfers. The CBN guide stipulates a N70 charge on transactions below N500,000; N100 charge on transactions between N500,000 and N1 million and a charge of N500 for transactions above N1 million.
But, again, most banks flout this directive. For instance, any out-bound electronic transfer done from a GTB account, for an amount as low as N1,000, costs not less than N105.
In another case, an Access Bank customer, Bola Owolola, told The Point that he received an alert of N100 deduction for stamp duty from his bank for a transaction. But the CBN approved a deduction of just N50 for stamp duty per transaction by banks. The list draws on.
While some customers whine at their predicament in the hands of the banks and the majority resort to fate, findings by The Point show that the banks are amassing fortunes from the illegal practice.
A consideration of operational processes and some of the illegal charges by five select commercial banks in Nigeria shows that they have defrauded their customers to the tune of about N95.7 billion over a period of two years. The banks include First Bank, Guaranty Trust Bank, Fidelity Bank, First City Monument Bank and Access Bank.
The Point investigations revealed that the collective amount of N95.7 billion arose after a collation of illegal charges from SMS alerts, ATM maintenance fees, account maintenance charges, money transfer charges, monthly ledger fees, hall congestion fees, monthly alert fees, over bloated cheque maintenance charges, and air time SMS alert fees, among others.
A breakdown of the banks’ charges showed that Access Bank, in spite of a previous intervention by the CBN, yet operates illegal account maintenance charges by imposing a flat levy of N200 per month on every customer’s account.
Given Access Bank’s estimated customer base of more than six million depositors, a flat illicit levy of N200 imposed on every account holder per month would give a total cash haul of N28.8 billion.
First Bank Plc operates a monthly service fee of N100 on every customer’s account. With a high customer base of 10 million people, the bank would have amassed a staggering N24 billion over the past two years.
To confirm this development, a visit to the bank’s branch office along Allen Avenue revealed that some customers were furious and complained about the SMS messages they got from the bank, notifying them of the deduction.
For GTBank, a compulsory deduction of N100 levy per month on customers account is made. GTBank’s customer base of 4.4 million people adds up to a total of N10.56 billion in 24 months.
When contacted for comments on some of the arbitrary charges, an Operations Manager in one of GTbank’s branches said that customers had to pay for contributing to the congestion in their banking halls. He said the bank had provided other electronic channels of transaction such as the ATMs, but if customers had to withdraw cash from the banking halls, then they had to pay N100 ‘congestion’ fee.
“Madam, this is the company’s policy and it goes across all our branches and even other banks,” he said.
GTB customer, Yetunde Badmus, who spoke with The Point, said the bank also made it mandatory for everyone to be sent SMS notifications, whether on request or not.
“I complained and even filled the indemnity form that I do not want to be sent SMS. What irks me more is the N10.00 per SMS, knowing that they are making at least N8.00 profit off me per SMS,” she said.
UBA charges N105 on every withdrawal, including ATM per month on customers’ accounts. With the bank’s eight million customer base, this charge alone results in about N20.16 billion in two years.
Another respondent, Janet Emmanuel, who banks with UBA, said, “How can a bank be deducting money at will? UBA deducts N105 for every withdrawal; it also charges N65 for ATM transactions. Sometimes I wonder if the CBN, which is the apex regulator, cautions these banks.”
Given Fidelity Bank’s estimated customer base of more than 2.3 million depositors, a flat rate of N200 on every withdrawal was imposed on every account holder per month. This gives an illicit accrual of about N11.04 billion in two years.
Further analysis of the banks’ charges showed that FCMB imposes N24 SMS flat rate on every customer’s account on a monthly basis. With two million customers, a total accrual of N1.152 billion would also have been amassed over the last two years.
“Contacted for comments on some of the arbitrary charges, an Operations Manager in one of the GT bank’s branches said that customers had to pay for contributing to the congestion in their banking halls. He said the bank had provided other electronic channels of transaction such as the ATM s, but if customers had to withdraw cash from the banking halls, then they had to pay N100 ‘congestion’ fee”
Consumer Advocacy Foundation’s view
The Consumer Advocacy Foundation of Nigeria, a non-profit-making organisation, had in March this year declared a ‘No banking day’ to protest the continued imposition of arbitrary charges on bank customers.
CAFON mobilised bank customers across the country to boycott banking services nationwide. The campaign was meant to force banks to stop the regime of arbitrary charges imposed on their customers. But that seems to have been an effort in futility, going by what the banks are still doing.
Some bank customers, who spoke with The Point, said the SMS introduced by Nigerian banks to ensure the security of account status had been turned into a major way of fraudulently profiting off customers.
Banks have been observed to be charging as high as N10.00 per SMS sent to a customer even when bulk SMS providers in the country offer less than N1.00 per SMS.
A prominent lawyer, who pleaded anonymity, related his experience while stating that the unending attitude of the banks to the deductions had been as a result of subscribers’ indifference.
He said, “The banks are fraudulent. They are milking customers of hardearned money, using all sorts of gimmicks and excuses. A lot of people are not complaining because the amount involved seems small. But then it accumulates.
“All these outrageous and illegal charges didn’t start this year. They’ve been doing it for some years now. I remember confronting my banker about three years ago to protest the charge of N105.00 on my account. At the end of every month, the sum of N105.00 was being deducted from my account, even though there were no activities.
“When I demanded to know what the charge was for, I was told that it is monthly ledger fee. To me that was absurd, but there was nothing I could do because the few people I told about it were trying to laugh at me for complaining about N105.00 per month.”
Apex Bank’s position
The CBN had on several occasions intervened on infractions between the banks and their numerous customers by introducing reform mechanisms to sanitise and stabilise the system.
The CBN, through its Deputy Director, Corporate Communications, Isaac Okoroafor, said bank customers who suspect fraud cases or compromise, whether in their accounts or in respect of information concerning their transactions in any bank, should promptly report to the authorities concerned.
Okoroafor explained that it would be very difficult for the CBN to take actions on a matter that is unknown to it, adding that even though the CBN had come up with an initiative to curb arbitrary charges by banks, customers must also play their part by being at alert at all times.
“You cannot force me to carry out judgment on an issue that is not really convincing. What you have to do is to look for a customer that is a victim of such fraud. Let the customer complain to the bank, and if not satisfied with the bank’s position, then the CBN can now take action according to laid down policy,” he said.
It was in the quest to provide a strong voice to bank customers and moderate the arbitrary charges that the CBN, in 2012 established its Consumer Protection Department.
Consequently, the Consumer Protection Department said it resolved over 6,000 complaints by bank customers, just as it had refunded N26.998 billion to customers whose accounts were illegally charged by their respective financial institutions as at April 2016.
But while reacting on whether bank customers could go to court on issues like this, the President of Bank Customers Association of Nigeria, Dr Uju Ogubunka, said it was quite possible for the bank to refund any money that had been illegally deducted if the customer could come up with evidence concerning that issue.
“But if the bank in question feels irritated, then the customer can go to court. Everyone has the right to go to court,” he said.
The CBN issued the first Guide to Bank Charges (GBC) in 2004. The stated objective of the GBC was to provide “a standard for the application of charges on various types of products and services deposit money banks in Nigeria offer to their customers – individuals, corporate organisations and governments (Federal, State, Local and their Agencies).” Following a review of the 2004 GBC, a revised one was issued in 2013.
The reasons for the review, according to the CBN, were that some of the provisions/terms in the 2004 edition “allowed room for ambiguity and conflict” and charges had become “out of tune with current realities in the market.”