Financial consumers in Ghana have in the recent past suffered distasteful treatment at the hands of financial service providers. This has happened because there is gross disregard for financial consumer protection in Ghana. Without mincing words, this unsatisfactory state of affairs can be pinned firmly at the doorstep of the Bank of Ghana, which is currently under the leadership of Dr. Ernest Addison.
Over the years, some financial institutions in Ghana have egregiously exploited consumers by suffocating them with unconscionable loan terms, given consumers misleading information about product pricing, and failed to disclose critical information about risks associated with products offered to consumers, among others. Furthermore, several thousands of depositors have lost their entire life savings as result of unlicensed financial institutions being allowed to freely operate.
In a well functioning financial system that prioritizes consumer protection, the situations described above will not be allowed to happen or allowed to go unpunished.
Since assuming office in April 2017, Governor Ernest Addison cannot be credited with any deliberate policy intervention aimed at proactively advancing the interests of financial consumers. This is in spite of the fact that, Section 3(2)(d) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) places an obligation on the Bank of Ghana to “develop appropriate consumer protection measures to ensure that the interests of clients of the banks and the specialised deposit-taking institutions are adequately protected”.
Sadly, not even the coronavirus pandemic that has brought widespread difficulties has succeeded in getting the Bank of Ghana to place consumer protection on the front burner.
While regulators and government agencies in other jurisdictions are actively leading the charge to ensure financial consumers are offered critically needed reliefs to help them navigate the coronavirus pandemic, authorities in Ghana have adopted a passive and disinterested approach.
In Egypt, the Central Bank of Egypt (CBE) has instructed banks to cancel ATM withdrawal fees and points of sale (POS) fees and commissions for six months. In addition, the CBE has instructed banks to give 6 months repayment holiday to individuals and businesses impacted by COVID-19. The CBE has also instructed the suspension of late fees (penalty interest). Furthermore, in an effort to reduce cash handling, all bank transfers within Egypt have been exempted from fees and charges.
In the United Kingdom, the Financial Conduct Authority (FCA) has confirmed “a package of targeted temporary measures to help people with some of the most commonly used consumer credit products”. The FCA says: “we know many people are suffering financial pressures brought on as a result of the coronavirus pandemic. The measures we’ve announced are designed to provide people affected with short-term financial support through what could be a very difficult time”.
In the United States of America, the Federal Housing Finance Agency (FHFA) has been proactive in ensuring consumers are afforded peace of mind during the coronavirus pandemic. The FHFA has announced a relief package that the institutions it regulates have made available to consumers. In addition, it has provided extensive information to consumers on the steps they need to take to access the reliefs, or to not incur late fees (penalty interest), or to ensure legal proceedings that could lead to repossessions are suspended.
A common thread that runs through the examples enumerated above is deliberate actions from regulators aimed at ensuring they proactively champion the interests of consumers.
What do we see in Ghana? The Bank of Ghana has decided to leave consumers at the mercy of the financial institutions. Financial institutions are at liberty to deal with consumers as they wish. Many consumers are narrating stories of how financial institutions are fleecing them and harassing them to repay loans even though they have lost their income due to COVID-19. For example:
- Banks continue to deduct account maintenance fees from customers’ accounts. Even when customers do not have money in the account, the banks still debit the account so that when the customer receives money through the account, the system will deduct its fees before the customer has access to the balance. Why should banks in Ghana be allowed to do this to poor customers during such a global pandemic? Why can’t the Bank of Ghana follow the example of the Central Bank of Egypt and cancel such fees?
- At the end of April 2020, banks debited borrowing customers’ accounts with loan repayments such that, customers who have lost their jobs or businesses and do not have enough money to fund their accounts have had their accounts thrown into negative; or have the repayments hanging on their accounts. Such customers have therefore gone into arrears on their loans and will suffer penalty interest. Why should the Bank of Ghana allow this to happen? Why is it difficult for the Bank of Ghana to instruct all banks to offer repayment holiday to customers who need it, just like the FCA has done?
- Why is the Bank of Ghana still allowing banks and MoMo operators to charge consumers for local transfers when it has been established that handling cash potentially exposes us to the coronavirus? Similarly, why are banks in Ghana being allowed to levy ATM withdrawal charges and local card transaction fees during this pandemic? Why should the financial institutions’ parochial profit motives be allowed to trump consumer safety? Surely, it mustn’t be hard for the Bank of Ghana to follow the lead of the Central Bank of Egypt and instruct all financial institutions to suspend such fees forthwith.
What should be the way forward in Ghana? From the foregoing, it is evident that Governor Ernest Addison needs to urgently and proactively leverage the COVID-19 pandemic to demonstrate that the interest of consumers is a priority for him and for the Bank of Ghana. Governor Ernest Addison must lead from the front in the effort to get financial institutions to offer critically needed relief to consumers.
As has been proposed by the Alliance for Financial Consumer Protection (AFCOP) and reported widely in the media, Governor Ernest Addison and the Bank of Ghana must urgently consider implementing the following 5 measures to provide relief to consumers:
- Direct all Banks and SDIs to immediately suspend account maintenance charges and/or commission on turnover (COT) charges for all personal and SME customers
- Direct all Banks and SDIs to immediately suspend all cards/ATM charges (issuance fee, maintenance fee, withdrawal fee etc.) for all personal and SME customers
- Direct all Banks and SDIs to immediately offer a minimum of 3 months repayment holiday (principal and interest) to personal and SME borrowing customers impacted by COVID-19
- Direct all Mobile Money Operators to immediately offer a minimum of 3 months repayment holiday (both principal and interest) to all MOMO loan customers
- Direct all Mobile Money Operators to immediately suspend transfer fees for all amounts
The proactive involvement of the regulator is the only way consumers can be assured that reliefs that bring real benefits to them are offered and are actually implemented by the financial institutions.
Woelinam DOGBE is the Convener of the Alliance for Financial Consumer Protection (AFCOP). He is a Chartered Banker and Management Consultant, and can be reached via email@example.com.