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CBN Mandates Banks To Notify Customers Before Commencing Debt Recovery Procedures

CBN Mandates Banks To Notify Customers Before Commencing Debt Recovery Procedures
CBN Mandates Banks To Notify Customers Before Commencing Debt Recovery Procedures

Notify Customers Before Debt Recovery Moves - CBN Tells Banks

The Central Bank of Nigeria (CBN) has mandated regulated entities to notify customers of outstanding obligations before initiating debt collection processes.

The objective is to ensure transparency, courtesy, and fairness in the debt recovery procedure.

The CBN delineated this instruction in a publication unveiled on Thursday through its website titled “Revised Consumer Protection Regulations.

The document emphasised that its purpose is to ensure financial institutions’ adherence to consumer protection principles.

Consumer rights are outlined within the regulations, aiming to improve outcomes and facilitate access to financial services.

According to the document, foreclosures should be pursued only as a final recourse when all other recovery alternatives have been exhausted.

Foreclosure is the legal procedure through which ownership of a property transfers to the bank or lender when the debtor defaults on the loan payments.

Customers should be given the option of a private sale before foreclosure, which must be exercised within 30 days unless the customer has waived this right,” the document stated.

The apex bank additionally required financial service providers to utilize the net proceeds from foreclosures to settle the loan account and notify customers of the remaining balance.

Furthermore, the CBN stipulated that banks must furnish customers with a comprehensive report on the sale of collateral, detailing the process, expenses, and net proceeds, highlighting that banks are accountable for the conduct of debt collection agents.

The document delineates limitations for loan providers concerning communication with individuals associated with a customer.

It stated, “Providers are not allowed to contact friends, employers, relatives, or neighbours for any information other than employment status, telephone numbers, or address. The only exception is if the person has guaranteed the loan or has given consent to be contacted.”

Moreover, banks are required to safeguard customers’ assets and bear responsibility for losses resulting from control breaches. They are also mandated to test products with consumers, adjust them to minimize fraud and errors, and implement transaction authentication measures.

The post CBN Mandates Banks To Notify Customers Before Commencing Debt Recovery Procedures appeared first on Naija News.

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