ARTICLE
20 October 2022

Appraisal Of The Rights And Duties Of Bank Customers In Nigeria

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S.P.A. Ajibade & Co.

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S. P. A. Ajibade & Co. is a leading corporate and commercial law firm established in 1967. The firm provides cutting-edge services to both its local and multinational clients in the areas of Dispute Resolution, Corporate Finance & Capital Markets, Real Estate & Succession, Energy & Natural Resources, Intellectual Property, and Telecommunications.
Banks and the banking sector are a very important aspect of any growing economy in view of the significance of the financial sector to the economic well-being of the country.
Nigeria Consumer Protection
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APPRAISAL OF THE RIGHTS AND DUTIES OF BANK CUSTOMERS IN NIGERIA1

1. Introduction

Banks and the banking sector are a very important aspect of any growing economy in view of the significance of the financial sector to the economic well-being of the country. it is no surprise the banking industry is one of the most regulated industries in Nigeria as the regulators are keen to guarantee safety of deposits of customer and ensure that their rights are well protected within a legal framework.2 According to Statista Research department, Nigeria had over 134 million active bank accounts as at 2021.3

A bank is a financial institution which offers services such as collecting of deposits and issuance of loans to the public. The banking sector plays crucial roles in the economy such as economic growth, promotion of entrepreneurship, creation of employment, regulation of the economy etc.4 The ability of the bank to perform these functions are contingent upon the maintenance of the relationship between the bank and its customer.

In NDIC v. Okem Enterprises Limited5the court defined a customer of a bank as any person having an account with a bank or for whom the bank has agreed to collect items and includes a bank holding an account with another bank. The customer of the bank may include individuals, firms, organisations, and other banks.6 And by virtue of their position as customers they are entitled to certain rights and have duties guaranteed by the law.

2. Nature of relationship between a bank and its customers

Under the eyes of the law, the relationship that subsists between a bank or financial institution and its customers is a contractual relationship which is usually categorised as a debtor-creditor relationship. When a contract exists, there are rights and duties which emanate from both sides. Such rights and duties apply to the contract subsisting between a bank and its customers. The relationship begins when a customer deposits money and it is accepted by the bank, it is implied that the bank is a borrower. The money is in the possession of the bank who is given the right to use it as it desires whilst the customers reserve the right to request for their money back.7 Once the bank accepts the money of a customer and opens an account in the customer's name, a contractual relationship is formed.8 Asides the debtor-creditor relationship, there are other kinds of legal relationships which may arise between a bank and a customer such as trustee and beneficiary, bailee and bailor, lessee and lessor, agent and principal, mortgagor and mortgagee. All of which are contractual relationships.

3. Rights of a customer

As part of its responsibilities to ensure that the rights of all banking customers are adequately protected and respected, the Central Bank of Nigeria published the Bank customer Bill of rights and duties9 aimed at ensuring that customers who are valuable stakeholders in the banking chain are happy and treated with the respect that they deserve at all times. Some of the rights contained in the Bill include the following:

  1. The right to be informed:

    A bank customer has the right to be fully aware of the terms and conditions under which bank services are being offered and to request for more explanation concerning such products or services for clarity purposes.10 The essence of this right is to ensure that all customers of a bank have all the relevant information they need to make appropriate decisions. This right to information is supported by the Nigerian Federal Competition and Consumer Protection Act 201811 which states that where a customer is required by law to be informed, such information must be in a language which the consumer can understand and comprehend.

  2. The right to privacy and confidentiality:

    In relating with a bank, a customer is required to release some information to the bank. Every customer has the right to the safety and non-disclosure of their sensitive information. The right to data privacy stems from the right to privacy in the constitution12 and it is also supported by the Nigerian Data Protection Regulation which provides for the principles under which data can be processed which includes confidentiality and the duty of care for all information in their possession.13 A bank is required to protect all information from third parties except where the customer consents to disclosure or where the bank is required by the law to make such disclosures.

  3. The right to safety and good service:

    The Nigerian Federal Competition and Consumer Protection Act 2018 provides that customers have the right to safety and quality services.14 The Act requires services to be provided in a reasonably safe manner and to meet reasonable standards of quality. A customer has the right to be safe and protected while in the bank's premises. They have the right to be free from any kind of harassment or pollution while in the bank. Customers also reserve the right to be given good services by all bank staff. The bank has an obligation to give adequate treatment to the customers when they have complaints. Customers must receive value for their money and customer satisfaction.

  4. The right to equality:

    A customer reserves the right to equal and fair treatment by all financial institutions with which they maintain a contractual relationship. The bank is under a duty to treat all customers equally and fairly regardless of variance in their financial standing, race, sex, ethnicity, age, gender etc. This right of a customer is in line with the fundamental human right against discrimination enshrined in the Constitution.15 Where a bank is in breach of this right, they are in breach of the Constitution of the Federal Republic of Nigeria. However, banks reserve the right to offer certain schemes to a particular class of customers depending on their dealings with the bank. In such instances, some customers may be entitled to some benefits which others are not.16

  5. The right to redress

    The Latin maxim ubi jus ibi remedium, means that wherever there is a wrong, there should be a remedy. All bank customers have the right to seek redress where the banks have failed in the duty owed to them. Banks must have an internal mechanism for ensuring that its customers can make complaints when they are dissatisfied with the services provided. Where customers are not satisfied by the bank, they can take more drastic measures of reporting the bank to the Central Bank of Nigeria or instituting a civil action against the bank.

Other rights of a bank customer include:

  1. The right to choose from the range of products offered by a bank
  2. The right to free monthly statement of account
  3. Right to consumer education17

4. Duties of a customer

Rights cannot exist devoid of responsibility. Therefore, as a bank customer enjoys the rights accorded by law, they must also carry out the following responsibilities:

  1. The duty to search for the appropriate information on their own for the knowledge and understanding needed to make correct decisions in a bank.
  2. A customer has the duty to meet up with their financial obligations depending on the kind of relationship they have with the bank. Customers must always repay the loans extended to them subject to the applicable interest rate which have been agreed upon.
  3. Customers owe themselves a duty to protect their bank information in order to make it easier for banks to protect them. Therefore, sensitive information such as card numbers, Bank Verification Number (BVN), passcodes, passwords etc., should be kept safe and secure at all times.
  4. Banks are required to provide truthful and honest information to their customers to enable them to make informed decisions. In the same vein, customers are also required to repay the effort and ensure that they provide appropriate and honest information to the banks when it is needed.
  5. Bank customers also have the duty to report any fraud or suspected fraud to the bank or the appropriate authorities in respect of any bank-related transaction.
  6. The customer is also duty bound to cooperate with the bank in obeying sectorial rules and regulations.
  7. A customer must be aware of the banks working hours and try to work within them.18

5. Conclusion

The above rights and duties are expected to be exercised unconditionally. This is important for the growth and stability of the banking sector. As long as a person has an account with a bank, they automatically have unfettered access to the above rights and their corresponding duties. It is the job of the regulators to ensure that bank customers can freely exercise their rights without prejudice. Furthermore, as the world continues to move into the digital age, customers have more duties concerning the protection of their personal information which could be jeopardized.

The CBN as a matter of responsibility must devise strategic means to ensure that the banks are responsive to the complaints of customers and ensure that erring banks are made to conform with the laid down rules as many bank customers are clearly frustrated with the procedure for handling complaints by the banks and the dispute resolution mechanisms put in place tend to be slow, tedious and rarely yield desired outcomes from the erring banks.

Footnotes

1. Uche Matthew, Associate, Corporate Finance and Capital Market Department and Folakemi Ayodele-Davis, Intern, Intellectual Property and Technology Department, SPA Ajibade & Co, Lagos, Nigeria.

2. See U. Matthew & O. Odutola, "Banks And Other Financial Institutions Act 2020: The Making Of A Super Regulator In Nigeria" available at https://spaajibade.com/banks-and-other-financial-institutions-act-2020-the-making-of-a-super-regulator-in-nigeria-uche-mathew-and-oluwademilade-odutola/, accessed on 30th September 2022.

3. See Statista Research Department, 'Number of active bank accounts in Nigeria from 2016 to 2021' available at https://www.statista.com/statistics/1182101/number-of-active-bank-accounts-in-nigeria/, accessed on 30th September 2022.

4. See InfoguideNigeria, '6 roles of banking in Nigeria economy' available at https://infoguidenigeria.com/6-roles-banking-nigeria-economy/, accessed on 30th September 2022.

5. (2004) 10 NWLR (Pt. 880) 107.

6. See Greymile, 'Bank – Customer relationship' available at https://greymile.wordpress.com/2015/03/04/banker-customer-relationship/, accessed on 30th September 2022.

7. See Legal Services Commission South Australia, 'Bank-Customer Relationship' available at https://lawhandbook.sa.gov.au/ch10s06s02.php, accessed on 30th September 2022.

8. See Sumiter Taterway, 'Banker Customer Relationship', available at https://bankingdigests.com/blog/banker-customer-relationship/, accessed on 30th September 2022.

9. See Bank Customers Bill of Right and Duties, available at https://www.cbn.gov.ng/Supervision/cpdconedu.asp accessed on 30th September 2022.

10. See Blominvest Bank, 'Customers rights and duties', available at https://www.blominvestbank.com/library/files/uploaded%20files/CRD-BLOMInvest-ENG.pdf, accessed on 30th September 2022.

11. Section 114, Federal Competition and Consumer Protection Act, [No. 18] 2018.

12. Section 37, 1999 Constitution of the Federal Republic of Nigeria (as amended).

13. Article 2 of the Nigerian Data Protection Regulation 2019.

14. Section 130, Federal Competition and Consumer Protection Act [No. 18] 2018.

15. Section 42 of the 1999 Constitution of the Federal Republic of Nigeria.

16. Iamcheated.com Research Team 'Rights and duties of banks and customers', available at https://iamcheated.indianmoney.com/blogs/rights-and-duties-of-bankers-and-customers, accessed on 30th September 2022.

17. See Central Bank of Eswatini, 'Rights of a customer in the bank-customer relationship', available at https://www.centralbank.org.sz/rights-of-a-customer-in-the-bank-customer-relationship, accessed on 30th September 2022.

18. See V Subramanian, 'Duties and responsibilities of a bank customer', available at http://www.allbankingsolutions.com/Articles/Articles-VS-Duties-Responsibilities, accessed on 30th September 2022.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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