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Arbitrary Bank Charges: Account Holders Seek Regulatory Authorities’ Intervention

By on March 27, 2011

BANKING industry regulatory authorities have been urged to tackle arbitrary and unfair charges banks usually deducted from their customers’ accounts without notification of such charges to the account holders.

The call, which was made in Lagos, at the weekend, at a customers’ forum, organised by a group of banks’ customers, is sequel to the past and on-going litigations instituted against many banks in the country by aggrieved customers, who have been victims of such unfair and secret charges, which run into millions of Naira.

Investigation by The Guardian revealed that among the unannounced charges banks normally deduct from customers accounts include 5 per cent VAT on every current account, Commission on Turnover (CoT), usually N5 on very N1,000 withdrawn or transferred from current account; Cell phone/Email alert charges, penalty fee for loan default, Searching fee, usually N5,000 paid to credit agency to establish the credit worthy status of those seeking loans.

Others are: N210 monthly maintenance fee for every current account, N5 inter-state commission for every N1,000 transferred into or withdrawn from savings accounts in a state different from where the savings account is opened or domiciled, etc.

Some customers at the forum complained that some banks, instead of charging the usual N9 that all GSM providers charge for a text message, impose an amount, sometimes as high as N20 per text message sent to alert their customers of transactions in their accounts.

Narrating his recent experience on arbitrary charges by banks, Mr. Okechuku Okeze, a customer of one of the first generation banks, located on International Airport Road, Mafoluku, Lagos, said his account was secretly debited with N33,000 without his knowledge for a facility he obtained from the bank.

According to him, his bankers secretly and arbitrarily charged him N11,000 per month (not a part of the agreed interest) for N800,000 facility he secured from it. He said the charges only got to his knowledge when he decided to liquidate the loan at maturity and that when he confronted the bank about it, he was told that he was debited N11,000 per month for his failure to lodge money into the accounts in three months.

“I could not lodge money into the account for the three months because the company that gave me the contract that I used the facility to finance did not pay me on time. Moreover, I did not bother to lodge money into the account because the maturity date for the loan was not yet due. But I was surprised when the bank slammed a N33,000 arbitrary fine on me for failure to lodge money into the account for three months without notifying me,” Okeze said.

According to him, the impersonal nature of banks in the country is partly responsible for their workers’ insensitive attitude and indifference to customers’ complaints.

He pointed out that bank employees, who do not want to be sacked from their jobs, rigidly implement instructions passed to them by their managers without considering the implication of such on customers.

Okeze’s case is one of several similar others in the banking industry in Nigeria. Whereas victims who are enlightened and have means to pursue their cases have dragged their bankers to court over such unfair and unexplained charges, many others who do not know what to do have simply bore their anguish in silence.

Among the recent cases in court over this nagging issue is that involving a retired army general, a medical doctor (name withheld), who took his bankers, a new generation bank, to court over an alleged unfair charge that amounted to millions of Naira, imposed on his loan facility.

In the suit, he prayed the court to appoint independent inspectors to thoroughly examine his loan to determine the exact amount he owes the bank based on the agreement documents he signed when the facility was granted. He averred that since the loan was granted to him, he has not reneged in servicing it, and had, in fact, liquidated a substantial part.

The officer, in a press interview, wondered how the bank came about the huge balance, even more than the original loan, in spite of the fact that he has not once defaulted in servicing it.

Again, recently, Lagos-based The White Dove School instituted a case against a new generation bank before a Lagos High Court, sitting in Igbosere, Lagos, over an alleged uncoordinated and unprofessional handling of N280 million loan facility the school procured from the bank.

The suit was filed by the school lawyer, Mr. Abiodun Idowu, who averred that the bank offered a N280 million loan facility to the school for the completion of the first phase of its expansion programme situated at Sango-tedo, Lekki.

He alleged that amongst the terms contained in the offer letter, which forms the basis of the loan contract, was that, the applicable interest rate shall be 17 per cent per annum but the bank failed, refused and neglected to apply the mutually agreed rate of interest of 17 per cent per year, but went ahead to arbitrarily charged and applied interest which at various times were as high as 19 per cent per annum, without the knowledge and consent of the school and worse still, without communicating such applicable interest rates to the school as the bank was expected to do.

The school, therefore, prayed the court to appoint independent auditors/chartered accountants to thoroughly and comprehensively investigate all transactions that have taken place on the account since inception of the facility with a view to determining the issues raised.


AN official of Chartered Institute of Bankers of Nigeria (CIBN), while commenting on the issue, said that the primary rule in all banking transactions is that the relationship between a bank and its customer is regulated by the written contract between the bank and the customer at the time of the opening of the bank account or granting a facility and such subsequent terms that may be agreed upon in the cause of normal day-to-day banking business.

He said that whereas in developed countries, law and websites abound which bank customers, who feel cheated can use to seek redress, in Nigeria, the Nigerian Consumer Protection Council is by law required to protect the interest of all consumers in all areas of products and services by providing speedy redress to consumer complaints.

An ex-banker, Mr. Oghomen Idode, said many Nigerians do not receive bank statements and when they do, they do not read it closely and raise objections to charges that do not form part of their contract with their bank. Failure to raise any objections to any disputed entry to your bank statement is an implied consent to abide by the entry.

He said much litigation abound in several courts abroad over unfair charges on loans, noting that banks can charge millions of account holders arbitrarily without their permission and through such raise a lot of money. This is the reason every bank customer is required to obtain bank statement to check and verify every transaction stated in it.

Officials, however, defended their banks on the allegation, arguing that they do not impose charges on customers’ account outside the bank, the Central Bank of Nigeria (CBN) stipulated in the guideline.

Following the growing complaints of illegal and unfair charges, a financial management & business consultants firm, Amazing Grace Appears Consults, based in Ibadan has come to the rescue. In its publicity document, the outfit claimed it could handle cases of excessive bank charges suffered by companies and wealthy individuals.

Mr. Adeleke Babatunde, an official, said they are a firm of Forensic Accountants in the business of re-computing various bank charges for clients with the aim to recover excess bank charges, especially those that were hidden in the bank statements over several years. “We have helped a host of companies and high-networth persons to successfully recover millions of Naira deliberately overcharged by their bankers,” he boasted.

Source : Guardian

  • Michaelolaoluwa

    This is a great relief for bank patronisers who have been suffering from illegal charges on their accounts. I have been with the Forensic Experts – Messers Amazinggrace Appears Consults, and comment that they have truly assisted some organizations in recovering their excess charges. Truly, Nigeria Banks are becoming more sanitized with the help of Forensic Accountants. This, we can describe as “VALUE – ADDED”.