BoG Raises Red Flags On 8 Financial Institutions
The Bank of Ghana (BoG) has released a report that summarizes the observations of an on-site supervision exercise it conducted on eight licensed financial institutions between November 2019 and February 2020.
The report identified some irregularities in these financial institutions. The BoG, however, did not disclose who these financial institutions are.
According to the central bank, the aim of the exercise was to ensure that these institutions comply with all consumer protection requirements under relevant laws and as prescribed by the Bank of Ghana.
It would be recalled that the Bank of Ghana conducted a clean-up in the banking and Specialised Deposit-Taking Institution (SDI) sector in 2017. This led to the central bank’s intensification of market conduct supervision. Hence, the establishment of the Market Conduct Office which saw at least thirty (30) weekly complaints from the public through phone calls, WhatsApp messages, e-mails, and direct walk-ins to the Market Conduct Office located at Cedi House.
The supervision exercise was undertaken by officials from the Market Conduct Office of BoG whereby the structures of the selected banks were examined, their systems observed, and the processes put in place by the institutions to promote consumer protection were supervised as well as the early resolution of customer complaints. Also, the exercise was to generally assess compliance of the financial institutions with relevant market conduct rules.
The BoG focused on some key areas like Board and Management of the complaints handling function. The report disclosed that the Consumer Reporting Officers were not submitting their reports, neither were the Board of Directors reviewing reports nor the institutions complying with the Bank’s directives such as training staff for COVID operations especially, customer service personnel.
The report revealed customers of these financial institutions were charged unfair penalties and involved in ridiculous banking practices without prior information.
It reads, “Changes in terms and conditions of loan agreements were made and implemented without the required period of prior notification of customers. The maximum penalty of 0.25% for early repayment of loans was breached.”
Examining the disclosure and transparency of requirements of the selected financial institutions, it was disclosed that, “some borrowers were not provided with pre-agreement disclosure statements prior to the signing of loan agreements. Borrowers were not clearly informed of the requirement to submit their credit data to credit bureaus and to conduct credit search on them when taking loans.”
The findings also showed that forms or slips used by customers were not properly disposed hence exposing their personal details to others. According to the report, the eight institutions used the data of their customers without their permission.
“Personal details taken from remittance customers were subsequently used for telemarketing promotional activities without the consent of the affected persons.”
In studying the marketing and advertising strategies of these institutions, BoG realised that they were unable to “deliver on marketing promise of disbursing certain loan facilities within 24 hours.”
Again, per the observations of officials from the Market Conduct Office of BoG, these financial institutions did not have the ambiance of a banking facility.
“Access to most banking facilities such as banking halls and ATMs were not friendly to physically-challenged persons. There were instances where hawking activities were allowed in front of some banking halls,” the report says.
COVID-19 responses by the BoG
Following the outbreak of Covid-19, the Bank of Ghana has implemented anumber of measures to help provide economic relief to individuals, households,and businesses, and to increase credit to key sectors of the economy to help witheconomic recovery.
The intervention of BoG has led to banks and other stakeholders in the payments system waiving fees on digital platforms ATMs, GhIPSS instant pay and cheque-clearing transactions.
Due to the intervention, “banks and Mobile Network Operators have waived transfer fees on mobile money transactions up to GHS100, all mobile phone subscribers are now permitted to use their existing mobile phone registration details to register for mobile money accounts without necessarily compromising on anti-money laundering and countering of terrorist financing measures; daily transaction limits, mobile wallet limits, and the monthly transaction limits for mobile money, have been increased.”
“Furthermore, following Bank of Ghana’s decision in March 2020 to reduce itspolicy rate to 14.5%, and its decision to provide regulatory reliefs to banks andSDIs, these licensed institutions have been able to conserve additional liquidity in order to provide a broad range of reliefs to their customers,” the report stated.
Read the report below: